If anyone is doubting just how massive Stablecoins are going to be you should read this article.
How programmable digital assets may change monetary policy
A recent Federal Reserve paper by Wong and Maniff contains a discussion of the “programmability” of money — a feature of smart contracts, which are self-executing pieces of code that can automate business processes, and which are associated with a subset of digital assets issued on blockchains. (These are either privately-issued, such as stablecoins designed to track the value of fiat currency, or a central bank digital currency; of critical importance to collateral markets, IOSCO notes that stablecoins can resemble regulated securities.)
The digital asset world has been talking about programmability for years, and mainstream financial players are now connecting the dots about its importance. Why? Because programmable digital assets exhibit high velocity, potentially exceeding that of traditional money in some jurisdictions. Amid the collapse in recent years of the velocity of traditional money, as QE and similar programs have expanded reserves on central banks’ balance sheets that remain mostly dormant, the rise of high-velocity, programmable money could pose important implications for monetary policy.
Programmable instruments, such as cryptocurrency stablecoins, already exist, and since they are issued by non-banks they are not money and cannot offer settlement finality in money. At more than US$1.1tn of on-chain velocity annually (which is verifiable) and over US$12tn of exchange-reported velocity (off-chain crosses not independently verifiable), the volumes are no longer small. Mainstream institutions are taking notice.
Why do these particular digital assets demonstrate significantly higher velocity than traditional bank money? These assets free up capital that would otherwise be trapped in unsettled payments, thereby improving the velocity of users’ capital (and returns on capital) — from traders to investors to corporate treasurers alike. They settle much faster than traditional payment systems — in minutes, not hours or even days — plus they settle on shared infrastructure (a blockchain), thereby eliminating the slow sequential settlement from one institution to the next and reducing counterparty credit risk. They also offer settlement finality, including protections from chargebacks and reversals that traditional payment systems may not provide. Most importantly, they are issued on API-based, smart contract platforms that enable users to build software applications to improve, for example, the payment reconciliation processes.
https://ftalphaville.ft.com/2020/09/03/1599134259000/How-programmable-digital-assets-may-change-monetary-policy/