Stablecoin regulations should reduce risks and allow competition: Fed's Waller

Stablecoins have the potential to provide "faster, more efficient retail payments as well, especially in the cross-border context, where transparency can still be low and costs can still be high," given the right network design, said Federal Reserve Governor Christopher Waller in a webcast speech hosted by the Cleveland Fed. He discussed potential benefits as well as risks of the form of digital currency generally pegged to a sovereign fiat currency, such as the U.S. dollar, and what that means for regulation of stablecoins. "Strong oversight, combined with deposit insurance and other public support that comes with it, is what makes bank deposits an acceptable and accepted form of money. Today stablecoins lack that oversight, and its absence does create risks," he said. The first risk highlighted by the President's Working Group on Financial Markets is a destabilizing run, Waller said. Another risk is payment system failure. "Stablecoins also present some unique