Boston and New York Fed conference examines the potential impacts of stablecoins
On April 11, 2024, the Federal Reserve Banks of Boston and New York hosted a virtual Conference on the Financial Stability Implications of Stablecoins. The conference brought together researchers, regulators, and industry participants to explore the implications of the rapid expansion of the stablecoin market on financial stability.
In her welcoming remarks, Boston Fed President and CEO Susan M. Collins highlighted the importance of understanding stablecoins, labeling them as a form of "private money" and emphasizing the need for policymakers and market participants to consider their key features.
Pablo Azar, a financial research economist at the New York Fed, presented a working paper on stablecoins, stating, "Stablecoins have grown very rapidly since 2020 … and they’re one of the few direct links between the crypto world and traditional finance." Azar's research focused on the behavior of investors during stressful periods and the similarities between stablecoins and traditional financial products.
During a discussion moderated by Kenechukwu Anadu from the Boston Fed, William Birdthistle, the former director of the Division of Investment Management at the U.S. Securities and Exchange Commission, raised concerns about investor protection in the stablecoin industry. Birdthistle highlighted the risks associated with stablecoins, noting that unlike money market funds, stablecoin prices can "fall to zero."
John Schindler, secretary-general of the Financial Stability Board, presented the conference's keynote address, emphasizing the need for a global policy framework to regulate crypto assets. Schindler stressed the importance of international cooperation and shared standards to mitigate stability risks in the stablecoin industry.
Marco Cipriani, conference co-organizer and head of Money and Payments Studies at the New York Fed, concluded the event by expressing the significance of studying digital assets' impact on financial stability and announcing future discussions on the topic.
The Conference on the Financial Stability Implications of Stablecoins included presentations, discussions, and high-level recommendations for the global regulation of stablecoins, aiming to address the evolving landscape of digital assets and their potential impacts on the financial system.
