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U.S. Treasury Pushes for CBDC to Replace Stablecoins

U.S. Treasury flags stablecoins as a potential risk to financial stability in the USA.

U.S. Treasury Pushes for CBDC to Replace Stablecoins
Quick Take
Quick Take
U.S. Treasury flags stablecoins as a potential risk to financial stability.
Suggests stablecoins should be replaced by a Central Bank Digital Currency (CBDC).
Stablecoins like Tether and Circle hold $120B in T-bills as collateral.
A CBDC could offer a safer alternative, per Treasury report.
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The U.S. Treasury Department has raised their concerns about the rising influence of stablecoins in financial markets, warning they may pose significant risks if not replaced by a Central Bank Digital Currency (CBDC).

This stance comes as stablecoins like Tether and Circle grow increasingly integrated with traditional financial systems.

In its latest report, the Treasury highlighted $120 billion in U.S. Treasury bills held as collateral by stablecoin issuers, emphasizing the potential fallout if stablecoins were to collapse. By tying stablecoins to traditional assets, the report argues, there is added pressure on financial stability.

The Treasury suggests that a CBDC would provide a more secure alternative, reducing risk and offering a more regulated form of digital currency as the U.S. considers the future of digital finance.

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