Stablecoins are cryptocurrencies that are designed to maintain a stable price over time. They are often pegged to a fiat currency, such as the Euro, and backed by collateral, which could be any asset of value but should ideally be cash or short-term bonds. It is to create no trouble but just a helpful tool. Stablecoins created based on algorithms or pegged by exotic assets are another part of the story, but let’s keep it simple and look at fully fiat-pegged stablecoins. Are they necessary in Europe?
Indeed, the debate on the necessity of stablecoins in Europe continues to rage. As such, some enthusiasts may argue that stablecoins are the bridge between the traditional financial sector and the new digital one. However, looking closely at the situation in Europe, it becomes pretty clear that stablecoins are entirely unnecessary. And we do not even talk about CBDCs some politicians want to prohibit.
The truth is, the Euro, the British pound (“Is this still Europe?”, just a question to all British people, please advise), and the Swiss franc, among others, provide a solid foundation for economic activities within the continent. These well-established currencies have been reliable for decades and offer stability for businesses and individuals alike. They are backed by robust economies and regulatory systems that have proven to weather the storms of time.
So stablecoins are utterly unnecessary in Europe. I mean, who needs a digital currency that’s stable and reliable? Shall Crypto Exchanges adopt stablecoins as a store of value instead of having fiat on their omnibus accounts? Crypto exchanges manage all the risks better on their own. Why segregate assets? Crypto exchanges may have no transparency about their banking partners, but why bother as investors? Everything will be okay. Time lags on transfers to and from exchanges are a natural thing. Quality banking partners and asset managers in stablecoin projects are not required. Let’s use the traditional rails, maybe returning to the suitable old fiat currencies backed by gold. Ok, just 180,000 tonnes are there, but dig gold from meteorites and other planets to make it work. Everybody will be happy.
We’ve got the good old Euro, the pound, and the Swiss franc — what more could we possibly need? Plus, why would anyone want to invest in a cryptocurrency backed by something tangible, like the Euro or gold? That’s just too secure and trustworthy for my taste.
Moreover, Europe enjoys a highly efficient, advanced banking system, where cross-border payments are a breeze, thanks to innovations such as the Single Euro Payments Area (SEPA) and Instant SEPA. These systems allow for instant and cheap money transfers across Europe, making the benefits of stablecoins, in this regard, redundant.
Who cares if stablecoins could make cross-border payments faster and cheaper or help people in countries with unstable currencies protect their savings? Sepa is the holy grail. Whoever wants to transfer money out of Europe? Not the people from Northern Africa or Turkey or? Or all these Internet of Things applications, maybe even edge computing, who wants to use it? Not forgetting that Europe is highly advanced in terms of technology adoption. The old fax machine is still humming in German offices, and their numbers are on many business cards.
Contrary to popular belief, the fax machine in German offices symbolises efficiency and reliability rather than technophobia. Europeans are not averse to adopting innovative technology but prefer practical, tested solutions over uncertain ones. That’s not our problem, is it? Let’s stick to the traditional financial system that’s been so well for centuries. It’s not like we need to innovate or adapt to changing times.
And let’s not forget the potential risks of stablecoins. Sure, they might offer more privacy and decentralisation than traditional payment methods and maybe even division of work to gain efficiency. That means they’re also perfect for illegal activities like money laundering and terrorism financing. Well, it seems cash is even better for it, and the track record of money laundering in the traditional finance system is impressive. Who cares about financial inclusion and empowering individuals to control their own money? Oligopolistic banking systems make so much money, so why bother even for financial education? Let’s keep things the way they are, shall we?
Considering these factors, the conclusion is that stablecoins might be more of a problem than a solution in Europe. Rather than embracing an unnecessary technology that poses significant risks, Europe could focus on further improving and refining its current financial system.
Let’s go even further and ban stablecoins altogether. We don’t need more options and flexibility in our financial system. We need more regulations and restrictions to keep things nice and predictable. Who wants to deal with the hassle of learning about new technologies and financial instruments? Learning about and adapting to new technologies and financial instruments could be seen as a hassle, mainly when the existing systems function well. That’s just too much effort for us simple Europeans. The good old times when bartering was a thing should come back. It would be so adventurous to barter financial advice against eggs or seven days in Ibiza against school education for the kids. We have made our life too easy already.
So, to sum up: stablecoins are utterly unnecessary in Europe. Let’s stick to the status quo and ignore new technology's fit and risks. Who needs innovation and progress when we can keep doing things as they’ve always been?
#Finance #Fax Machine #Education #Digital Transformation #Crypto