Due to their specificities, stablecoins are a novelty in tune with some markets’ needs. In the context of the economy’s digitalisation, the past decades have shown how Fintechs as well as Bigtechs have aimed at taking advantage of the latest advances in web-based technologies, notably blockchain, to provide new payment credit and investment services. Often, they propose to achieve this through the creation of various new assets (coins, tokens, stablecoins, with or without smart contracts). We all have in mind the first generation of crypto-assets such as Bitcoin and Ethereum, initially designed to be instruments of exchange in the digital world but suffering from a number of limitations, not least severe price volatility and a lack of guarantee of their convertibility and security. A second generation is emerging in the form of « stablecoins », such as the JP Morgan 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.
But first of all, let me briefly outline what exactly have been the challenges in recent decades that have required us to rethink the way we conduct policy. Globalization has been a long and drawn out process. Countries have jumped at the opportunity to reap the benefits of globalization, with advanced countries leading the pack. Jumps in technology in recent decades, particularly in information and communications, have ensured that services – particularly financial services – have become truly borderless for advanced and developing countries alike, in a much shorter period of time. 2. Challenges to traditional monetary policy under globalization  We are all familiar with the benefits of globalization, with the past few decades seeing cheap exports from emerging markets fueling global trade and growth, albeit with some hiccups along the way. China’s accession to the WTO and the subsequent flux of Chinese exports to the rest of the world, as well as oil exports from the Middle-East, helped to create an environment of prolonged low global prices and low global inflation. We are all familiar with this episode and have given it a few names: the great moderation, the Goldilocks’ economy – not too warm and not too cold, and stable disequilibrium. This is an episode in our history where variability of growth in real output has declined along with the variability in inflation. Along the way, imbalances in the global economy began to build up.