Page 84 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.79, # 1, 2022, pp. 80-89

On the other hand, stablecoins are not accepted everywhere. The possibility of using
them depends on national policies and regulations. Some countries completely ban
cryptocurrency, while others promote its use regularly.

In addition to using it for daily trading, stablecoins can be traded on crypto
exchanges. Some exchanges allow you to lend your stablecoins and earn interest.
There are both fixed and flexible lending models, as well as person-to-person (P2P)
crypto credit markets. Stablecoins currently offer the highest interest rates on most
exchanges between 5% and 25%. There are many opportunities to earn income on
fixed assets, and they will expand as the DeFi (Decentralized finance) system
continues to grow (Romain Dillet March 2021).

WHAT İS THE DİFFERENCE BETWEEN STABLECOİN AND CENTRAL
BANK DİGİTAL CURRENCY (CBDC)?
The Central Bank Digital Currency (CBDC) is a digital expression of the official
currency of any country. The CBDC facilitates the implementation of monetary and
fiscal policies and promotes financial inclusion in the economy. The main difference
between CBDC and stablecoin is that the CBDC is issued by the country's monetary
policy-making body or the central bank, while the stablecoin is issued by a private
organization (Business Insider India December 2021, European Central Bank
November 2021).

Digital currencies backed by the central bank, such as the potential digital euro and
the digital yuan, could become a reality in the coming years. Unlike
cryptocurrencies like Bitcoin and Ethereum, these currencies promise less volatility
and more security. In addition, they will have the support of relevant monetary
institutions responsible for ensuring financial stability.

INTERNATIONAL EXPERIENCE WITH STABLECOINS
The experiences of the UK, China, the United States, Thailand and the international
card organization VISA on stablecoins have been studied (Berkshire Hathaway
Company March 2021, Bank of Thailand Press Release No. 16/2021, Central Bank
of France 2019, Bank of England 2021, Romain Dillet March 2021).

Bank of England’s Financial Policy Committee’s stablecoin expectations inform the
design of regulation for stablecoins. The expectations aim to ensure the safety of
stablecoins as an alternative to both existing payment systems and commercial bank
money. To meet these expectations, a regulatory framework would need to be
clearly established before a stablecoin could safely operate in the UK.

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