The director-general of the Bank for International Settlements (BIS), Mexico’s Agustín Carstens, has urged proper regulation of private stablecoins to address risks such as leaks and concentration of economic power following the launch of Facebook’s Novi digital wallet.
Carstens told a virtual conference organized by Goethe University Frankfurt that “wherever stablecoins are issued, they must be properly regulated to address risks.”
He also stated that effective and consistent international policies are necessary.
“Innovators should not be afraid of regulators, but should work with them to make their products healthier and more sustainable,” Carstens apostatized in a speech on “Digital Currencies and the Soul of Money.”
Stable cryptocurrencies are digital assets that want to maintain a price without high volatility by anchoring themselves to other safe-haven assets such as the dollar or other regulated financial instruments.
In this sense, stable cryptocurrencies “carry on their back or use the credibility of these safe assets,” said Carstens, who was governor of the Bank of Mexico.
As a result, they have achieved great relevance for the financial system in several major economies.
For example, Carstens added, large technology companies provide 94% of mobile payments in China.
“This trend could accelerate if one of these companies were to create a dominant, closed ecosystem around its own global stable cryptocurrency,” according to the CEO of the BIS, which is headquartered in the Swiss city of Basel.
Novi is running a digital wallet pilot project in the United States and Guatemala using Paxos for sending remittances.
Novi, which is the pilot digital wallet of Meta, formerly Facebook and now the parent of Facebook, Instagram, WhatsApp, to send and receive money, uses the stable cryptocurrency Paxos, the digital dollar, and is available on WhatsApp.
A limited group of people in the United States can use since the beginning of December Novi to send and receive money via their WhatsApp chat.
Paxos is a currency that is based on the Ethereum (ETH) blockchain technology and is anchored to the dollar.
To sign up for Novi, you simply need to download the Novi app and it is also going to be available on other Meta apps, such as Messenger.