Published on: November 23rd, 2021 • Duration: 54 minutes
The ability of stablecoins to track collateral and settle instantly could be a game-changer.
Caitlin Long, Founder & CEO of Avanti Financial Group, and Dr. Manmohan Singh, Senior Financial Economist at the International Monetary Fund, discuss why stablecoins can resolve issues stemming from bank counterparties re-using collateral. Long explains how interest in cryptocurrencies evolved over time and stresses the value in stablecoins: “Now, if we have digital versions of collateral that settle in minutes with irreversibility on a blockchain, that might solve some of the collateral issues, the bottlenecks that have arisen in the traditional finance. And also, very importantly, make it very obvious to everyone how long collateral chains are, and therefore, how much leverage there really is in the traditional financial system.” In the interview, Long and Singh explain that if the Fed starts using stablecoins, banks will need to respond to problems faster because transactions settle instantaneously, and regulators can begin to work proactively to reduce banks’ counterparty risks as they see rehypothecation of collateral. Tune in to see how stablecoins could be just what the financial system needs. Interviewed by Ash Bennington on November 18, 2021.