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Stablecoins quickly became a leading market, but that does not mean that their stay ceased to be questioned. The bank for international establishments has recently raised this issue, with its new report stating that stalls fail with three crucial criteria that all good money must meet: celibacy, elasticity and integrity. But personally, I cannot completely agree with this evaluation.
Summary
- Bis critical against reality: the bank for international colonies says that stable stages fail in celibacy, elasticity and integrity – but the argument neglects the way in which these apply in practice.
- Celibacy is not absolute: as bank deposits during crises (for example, SVB), stablecoins can temporarily deviate, but the USDC / USDT exchanges always 1: 1 and operate when the banks are closed.
- Elasticity is different, not absent: banks rely on settlement delays to create liquidity, while stabbed are instantly enjoying. Mechanisms like flash loans show that elasticity can be coded.
- Integrity cuts both senses: banks stop less than 1% of illicit flows, while blockchain transparency allows better tracing and even recovery of stolen funds.
- Current work, not failure: Stablecoins do not need to imitate banks – they just need to preserve value, move effectively and maintain confidence, which often does it in a way that banks cannot.
Admittedly, Stablecoins are not perfect. Despite considerable growth, the market is still low compared to the traditional bank, and predictions concerning its future progress has already been covered in recent times. JPMorgan, for example, now sees the Stablescoin market reaching $ 500 billion by 2028 – down by half compared to billions of dollars on which some were betting last year.
In addition, the Stablecoins have not yet seen generalized adoption beyond the crypto-native platforms. In other words, they still have a long way to go before they can become traditional financial tools or rival banks.
But that does not mean that they fail in the three tests that bis used to reject them. In fact, I would say that they could transmit them better than banks. It all depends on how we look at him.
Celibacy: a practical perspective
The Bis report maintains that stablecoins lack “celibacy” – the idea that each money unit should be worth the same thing as any other unit. On paper, it seems reasonable. In practice, however, celibacy is never perfect. Even bank deposits can lose value or become illiquid during stress.
Take USDC (USDC) and TETHER (USDT), the two largest and most famous stablecoins. They are no less “single” than traditional bank deposits. Holders can buy them against US dollars at their nominal value. Sometimes the market price is slightly deviates, but the same can be said for bank deposits. You just have to come back to the collapse of the Silicon Valley Bank – some depositors sold their complaints at a reduced price so that they can go out more quickly. It is not so different from the USDC by temporarily exchanging below its ankle during the same crisis because people were tight of where the reserves were.
Stablecoins, however, offer something that banks do not do: the ability to absorb immediate demand. On weekends or holidays, when the banking system is closed, you can still exchange USDT or USDC. Tokenized banking deposits – if they gain traction – would probably behave in the same way. So if we are correct, the stablecoins were not celibacy; They simply show how the concept itself faces obstacles in real conditions.
Elasticity: faster does not mean lower
Then: elasticity – the idea that a monetary system should develop or contract to meet real economy demands. The bis claims that stablecoins lack elasticity because they require money in advance. You cannot spend what has not yet been struck, and the additional emission requires initial payment by holders.
But here is the capture: Stablecoin transactions are very different from the traditional bank. With banks, when you transfer funds, you often need at least a complete working day for money to be set. Meanwhile, banks can effectively “print” temporary money because the same funds can appear in two places at a time: the sender’s account always displays the balance while the recipient’s bank deals with incoming payment. This gap is one of the ways in which the banks maintain liquidity and maintain the flowing payments, even when the real money has not yet moved.
Stablecoin transactions work differently because the regulations occur instantly on the blockchain. As a transaction is confirmed, the funds are transferred – there is no “transit money” as with the banks. That said, it is possible to build cryptographic mechanisms that imitate banking type liquidity.
One way of doing it consists of flash loans, where the mainly “unpaid” stablecoins are borrowed and reimbursed in the same blockchain transaction. This means that liquidity is supplied instantly, without the risk that the system remains with poor debt.
It is a different model, but it shows that the stablecoins do not have to copy the banks exactly – they can integrate the elasticity directly into the code, quickly adjusting transactions while developing if necessary for the operation of the system.
Integrity: Is the banking system really safer?
Finally, the BIS report raises the question of integrity: the way in which a monetary system prevents illicit activity and guarantees conformity. Banks have decades of anti-flowage measures in place. The crypto, by design, is more open – and which worries regulators.
But the traditional banking LMA is hardly infallible. The United Nations estimates suggest that less than 1% of financial crime is in fact stopped by today’s systems. In crypto, hacks occur – and they are incredibly frustrating – but the transparency of blockchains makes the stolen tracing funds in a way that banks cannot correspond.
Consequently, an important part of stolen cryptographic funds can possibly be recovered. Maybe not everything, but it’s still much better than the small fraction of illicit funds intercepted in the traditional banking system.
Stablecoins are a work in progress – but that does not mean that banks win
In short, reject the stablecoins because they work differently from the bank that completely lacks the point. Stablecoins do not need to be banks to succeed – they just need to do what money is supposed to do: maintain your value, move when needed and maintain confidence.
Of the three fronts – celibacy, elasticity and integrity – the comparison is much more nuanced than the bis relationship suggests. If anything, the test should also push banks to evolve. After all, the future of money does not concern the defense of inherited models; It’s about building systems that actually work for people who use them.
