The perils of Stablecoins

  1. The amounts are all held in different locations; it is not one pot of 180
  2. Risk wise it is not all equal — bank risk vs. tow flavours of corporate risk, and on the asset side of the balance sheet there would need to be a Risk Weighted Assets adjustment. So a not so small, though maybe manageable headache for the UBS risk apparat
  3. Each of those holdings of coin is an IOU
  1. Store of value — not 100% because of the need to risk weight the asset
  2. Medium of exchange — not 100% because the person you owe money too might not be able to take the risk of the IOU issuer
  3. Unit of account — again not 100%, because of the risk weight

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Olaf Ransome

Olaf Ransome

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The Bankers’ Plumber. I help banks and FinTechs master their processing; optimising control, capacity and cost. I also offer training courses; Operational Risk