In a recent opinion piece featured in The Wall Street Journal, financial experts Brian Brooks and Charles Calomiris underscore the significance of enacting robust legislation for stablecoins in the United States. Brooks, a former executive at Binance.US and Coinbase, as well as the ex-U.S. Comptroller of the Currency, joined forces with Calomiris, the dean of economics, politics, and history at the University of Austin, to advocate for a sound regulatory framework surrounding stablecoins.
Averting Dollar Decline
As the world witnesses a potential shift away from the US dollar’s global reserve currency status, Brooks and Calomiris assert that stablecoins could play a pivotal role in revitalizing the dollar’s dominance. They reference data from the International Monetary Fund, which reveals a decline in foreign central banks’ holdings of US dollar reserves from nearly 73% in 2000 to 59% today. In light of this trend, the authors emphasize the need for proactive measures.
#ICYMI: U.S leadership in stablecoins can cement the Dollar's global reserve currency status.
Our bipartisan Clarity for Payment Stablecoins Act provides the necessary consumer protections to help this technology achieve its full potential.
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— Patrick McHenry (@PatrickMcHenry) August 10, 2023
The authors caution against the adverse effects of de-dollarization on the American economy. Highlighting the importance of the dollar’s reserve status in minimizing borrowing costs for the nation amidst heightened government spending, Brooks and Calomiris stress that stablecoins could mitigate potential economic vulnerabilities.
Empowering Individuals and Nations
Brooks and Calomiris further illuminate the potential of stablecoins in aiding individuals in nations experiencing hyperinflation. By providing easier access to the US dollar, stablecoins could offer relief to those grappling with financial instability.
The authors underscore the impact of stablecoins on global consumer purchasing power, as their proliferation could bolster demand for the US dollar, irrespective of political decisions by other nations. This renewed demand, they contend, could help insulate the dollar from potential decline.
Ultimately, the experts advocate for the swift implementation of stablecoin regulations, emphasizing the urgent need for Congress to establish a comprehensive and stable regulatory framework. They assert that such a framework would not only secure the US dollar’s global dominance but also fortify the nation’s economic vitality in an ever-evolving global landscape.