A new report from the Bank for International Settlements (BIS) has advocated the deployment of ‘Embedded Systems’ in the monitoring of global stablecoin projects such as Facebook’s proposed Libra.
The report noted that the emergence of distributed ledger technology has caused a paradigm shift in payment systems particularly with the rollout of stablecoins.
The coming of stablecoins also served as a wake-up call for Central Banks around the world who are saddled with providing the needed regulations for these fast-emerging digital currencies that aim to overhaul global payment systems. This new BIS report proposes the use of embedded monitoring systems as one of the viable means to employ in the tracking and regulation of stablecoins.
“Global stablecoins should take into account the potential of other stablecoin uses, such as embedding a robust monetary instrument into digital environments, especially in the context of decentralized systems,” the BIS report reads. “Looking forward, in such cases, one possible option from a regulatory standpoint is to embed supervisory requirements into stablecoin systems themselves, allowing for “embedded supervision.”
According to the Bank for International Settlements (BIS), besides the integration of embedded monitoring systems into stablecoin projects, Central Bank Digital Currencies (CBDCs) could also serve as an effective way in curtailing the global dominance that private global stablecoins like Libra may bring.
To date, some countries have made remarkable advances in developing their own CBDC with the BIS confirming that a good number of Central Banks have a positive outlook to Central Bank Digital Currencies. While those countries with positive disposition are at a varying stage with respect to their CBDC developments, nations like the Bahamas and China have rolled out an actual CBDC that is being used in transactions. The launch of the Bahamas Sand Dollar is official while that of China is in its advanced trial stages.
The BIS appears to have confidence in ‘Embedded Supervision’ systems. A BIS economist prior to this time once suggested the use of Embedded supervision to enhance the transparency of tokenized markets.
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