Stablecoins, the new money to save global capitalism from the Covid crysis

small cruptocurrencies around the planet

Stablecoins can become saviors of capitalism. After two months of an official pandemic, most of the global supply chains have remained. There have been important exceptions derived from excessive demand, such as that relating to medical devices that have risen to the level of vital need: respirators, tests to perform the coronavirus test, masks, etc.

Some have had problems, such as those of the automotive industry components or technological components manufactured in China, but those of basic products have remained. This, despite the fact that many governments of the countries that generate these basic products, such as cereals or rice, determined to give preference to the self-sufficiency of their populations, over exports. At the moment, global capitalism is surviving. At least, as the German sociologist Streeck says, he is buying time.

The money supply chain

man going above the abyss

However, the maintenance of these chains has been possible thanks to the maintenance of the main supply chain, which is that of money. Payments have been made and guaranteed. Most of them in cash. But, behind the massive indebtedness caused by the pandemic itself, black clouds loom on the horizon. The demand for cash payments is going to be even higher. As a provider, when there is a shadow that your client may have such problems that it could even go bankrupt, what you want is for them to pay at the same time as the transaction and with securities or securities that are practically impossible to change afterwards.. This can only be achieved with money in the most accepted currencies.

Therefore, liquidity and cash will be needed. Payment in hard cash. Countries and large companies operating in international markets will need the reference currencies, especially dollars.

The question is, if everyone is looking for liquidity and converting their securities into money or emptying their deposits and accounts, will there be enough cash? On the other hand, it is not to imagine transactions between large corporations carrying bags or suitcases of tickets. As Michael Casey says, dollar-supported stablecoins may be an option.

Stablecoins trading increase

exchange money for monets

Close enough to the strongest money, like the dollar. Far enough from the direct and exclusive control of banks, including central banks. Payments would not need to go through intermediaries. Being, on the other hand, outside the banking network and, therefore, the traditional financial system, it would be outside the threats that hang over it.

Perhaps this is what explains the notable rise in the price of some stablecoins, such as Theter, while almost all other value signatories, including cryptocurrencies, have tended to trade lower. That is, it is beginning to extend the realization of transactions in stablecoins.

As it has been announced in the Blockchain Observatory, there are already countries that have already launched their stablecoin, as is the case of the Bahamas. China is already on the exit ramp and is going to start paying part of its officials’ salaries with its digital currency.

Eu response

In countries quite reluctant to hear about digital currencies, such as the United States, there are already proposals in Congress to send the payment to face the emergencies arising from Covid-19 with digital dollars, instead of having to remit by mail millions of checks. Given the pressure exerted on some countries in the euro area, stablecoins may be a response to the fall of the single currency, the euro, opening the margin of action for european governments to adopt it.

You may also be interested: Are stablecoins becoming safe haven in the face of the Covid19 crysis?

Therefore, it is the problems that arose in this phase of global capitalism that are laying the foundation for another form of money. For the moment, money, as we have known and used it in the last hundred years, has become a problem for the development of capitalism itself. At the moment, they can allow to continue paying. In other words, supply chains continue to operate. Stablecoins can be the new gasoline of capitalism.

Keep in mind that adapting the old rules and regulations is difficult. They depart from another world. But neither is it possible to think of a scenario of thousands of autonomous stablecoins, with no regulation other than that given by the actors participating in the transactions. As the G20 has recently said regarding stablecoins, although surely for other reasons, it is time to start thinking about a consensual global regulation of this type of money.

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