coin, ubs ’ s utility settlement coin or facebook ’ s libra. they share many of the features of crypto - assets but seek to stabilise the price of the “ coin ” by various means. they might therefore be more capable of contributing to the enhancement of payment systems, with a potentially global reach, especially those sponsored by large technology or financial firms. in the retail market, stablecoin - based solutions seek to address evolving consumer preferences towards instantaneous, continuous, and standardized payments, as consumers become ever more mobile. while this demand is largely already met through an increasingly diversified and digitalised supply by many payment services providers – be they new entrants or established players -, stablecoins could challenge the latter by offering cheaper, easier and instant anonymous and peer - to - peer payments. in addition, at the global level, we are far from having a network ( or set of interconnected networks ) that could support quick and cheap 1 / 4 bis central bankers'speeches transfers of funds. the current supply of cashless means of payment lacks a universal and ergonomic cross - border solution akin to cash person - to - person payments. stablecoins could be seen as a “ universal ” means of payment facilitating cross - borders payments in a single unit of account. as we know, this is an argument put forward by some global stablecoins promoters. furthermore, stablecoins could help remedy other limits of the existing payment ecosystem, even if the issues at stake might concretely vary between developed and developing countries. in particular, their blockchain - based technology could help improve wholesale clearing and settlement mechanisms and facilitate delivery - versus - payment processes as well as cross currency settlements, while guaranteeing resilience and recovery from operational incidents. however, stablecoins may also bring material risks to payment systems. as many central bankers have pointed out, stablecoins do not satisfactorily offer the qualities expected from a settlement asset to be used interchangeably with commercial bank money and central bank money. as intermediaries in exchanges, stablecoins are far less effective than a settlement asset with legal tender status, insofar as ( i ) they are not entirely stable since their price stability depends on the value of a basket of assets, and ( ii ) they offer no guarantee of a refund in the event of fraud. the fact that they have no intrinsic value and that they offer no guarantee that they may be converted at par upon demand

circumstances? real interest differentials of, say, 3 % might persist for a decade or more. if these numbers are realistic, the portfolio balance model would suggest that the exchange rate has to appreciate initially by some 30 % ( and will appear seriously and persistently uncompetitive for trade in goods and services ), before depreciating by 3 % per year over the following decade. so the potential swings in real exchange rates, even if well - behaved in terms of the model, are much greater for emerging markets. add to this some extrapolative expectations, some herding, and above all a risk premium which varies with the latest wave of euphoria or pessimism, and the potential both for volatility, and for significant and sustained misalignment - in both directions - is clear. it seems unlikely, to say the least, that an exchange rate could follow this portfolio - balance path of appreciation followed by depreciation without the market balking at the large shifts and the overvaluation during the long transition. is it not surprising, in such a world, that countries have sought to limit the extent of the swings ( misalignments ). they have sought to resist the appreciations of the exchange rate during the periods whether these persistently high rates were a response of the underlying fundamentals, or a period of prolonged euphoria, is not the point. i favour the first explanation, but whatever the reason, domestic borrowers had strong incentives to seek foreign - currency - denominated ( ie lower interest rate ) funding overseas, and foreigners had incentive to provide funds. keynes ( 1980 ) had identified this problem in 1942 : “ in my view the whole management of the domestic economy depends upon being free to have the appropriate rate of interest without reference to rates prevailing elsewhere in the world. capital control is the corollary of this. ” of large capital inflow partly because of an intuition ( which gains some support from the japanese experiences in the 1950s and 1960s ) that strong international competitiveness provided beneficial price signals for the most dynamic sector of the economy - tradeables, especially exports. elements of old - fashioned mercantalism may be present also. perhaps more important still, the large foreign capital inflow creates a destabilising feedback loop while the inflow is strong, the rising exchange rate reduces the cost of borrowing in foreign currency, and encourages more borrowing. at the first sign of some weakness in inflow or