Stable digital currencies—and particularly Facebook’s plans to launch one—have central bankers playing defense.
For years, powerful central banks around the world have claimed to be studying digital currencies, and most have left open the possibility that one day they might launch their own. That day may be dawning—much earlier than anyone expected.
In a recent blog post, IMF economists Tobias Adrian and Tommaso Mancini-Griffoli called on policymakers to take “prompt regulatory action” to address the “notable risks” posed by privately issued digital currencies, called stablecoins, that are designed to maintain a consistent value. More to the point: central banks may need to get into the stablecoin business themselves.