ECB report says the term 'stablecoin' needs reform because of its ambiguity

A new European Central Bank (ECB) report calls for the term "stablecoin" to be reformed or reconsidered because of its ambiguity.

The 30-page report the Eurozone's central bank, published Tuesday, drew a distinction between stablecoins and existing forms of currencies, defining stablecoins by a few key characteristics based on the purposes they serve: as a crypto asset, as a new payment method, and as an alternative store of value.

The report referred to stablecoins as digital units of value that are not a form of any currency, and which rely on tools to decrease their price fluctuations against existing, government-issued currencies. 

According to the report, although the term "stablecoin" has various benefits, the use of the term could make false promises of stability and consequentially put consumers at risk. 

"The term “stablecoin” may be perceived to have positive connotations in terms of stablecoins’ intrinsic stability and usability as a form of money but these features are neither intrinsic to, nor a prerogative of, stablecoins in and of themselves – instead they can be attained only through appropriate design and effective risk management," the report read. 

About Author

Saniya More (pronounced: Saan-ya Mo-ray) is a quadrilingual journalist at The Block. She got her master’s degree from the Columbia University Graduate School of Journalism and did her undergraduate degree at the S.I. Newhouse School of Public Communications, Syracuse University. Her work has appeared in CBS News, Bangkok Post, Thai Enquirer, Globalists, Byline Times and other publications. When she’s not chasing a story, you will most likely find her biking, tweeting, taking photos or creating Spotify playlists for every occasion.