On November 8, the Federal Reserve published its latest financial stability report.
The report highlights a range of vulnerabilities in the financial sector, including a section on stablecoins, comparing their risks to money market funds.
Referencing a separate report from the President’s Working Group released last week, the Fed’s appraisal was that:
“Certain stablecoins, including the largest ones, promise to be redeemable at any time at a stable value in U.S. dollars but are, in part, backed by assets that may lose value or become illiquid. If the assets backing a stablecoin fall in value, the issuer may not be able to meet redemptions at the promised stable value.”
Yesterday’s report also featured two polls of industry participants, one conducted in the spring and one in the fall, asking them to name potential shocks to financial stability.Source: Financial Stability Report, Federal Reserve, Nov. 2021[/c