PayPal CEO Dan Schulman, who recently left office, highlighted the enormous importance of such digital currencies for the future of the financial system around a month after the payment service provider announced the launch of its own stablecoin.
• PayPal CEO calls for improvements to the financial system
• Stablecoins & CBDCs are likely to help shape the future of payments
• Regulation of great importance
In order to reduce friction when making payments in the virtual world and to enable quick money transfers between private individuals as well as cash payments for goods and services, PayPal has acquired its own cryptocurrency called “Paypal USD” (PYUSD). The digital money based on the Ethereum blockchain is pegged to the US dollar and backed by, among other things, dollars and short-term US government bonds. The stablecoin can be exchanged one-to-one for US currency, the online payment service announced at the beginning of August.
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Dan Schulman on the future of the payment system
Around a month later, Dan Schulman, who left the executive chair at PayPal at the end of September after nine years, expressed optimism about the new stablecoin program at an industry conference – although it is currently more of an experiment that will probably only end with the Time will deliver results: “It may be that in five years we will look back on our stablecoin launch as one of the most important and innovative things we have ever done,” said PayPal’s CEO at the time.
The launch of its own stablecoin fits with the need for an overhaul of the US financial system, Schulman explained at a Goldman Sachs investor conference: “I firmly believe that the financial system needs to improve its infrastructure,” said Schulman. In his opinion, stablecoins linked to a fiat currency, as well as digital central bank money, so-called Central Bank Digital Currencies (CBDCs), are likely to be enormously important for the future of payments: “I think that CBDCs or stablecoins, and probably a combination of Both will complement and perhaps redefine large parts of the financial system.”
Importance of regulation
The Federal Reserve, which is responsible for the US monetary system, is currently urging Congress to create a robust federal framework for stablecoins, otherwise they pose significant risks to financial stability monetary policy and could represent the US payment system. In this regard, Schulman emphasized that PayPal’s stablecoin program was created in collaboration with regulators and will continue to be in line with smart regulation.
Additionally, Schulman recommended that digital currency providers cooperate with regulators. He also included the Financial Crimes Enforcement Network and the Office of Foreign Assets Control, which he said should “freeze and seize bad actors” if illegal financing schemes are uncovered.
Schulman also advocated that stablecoin operators should be “fully transparent.” For example, they should have their operations audited monthly by accounting firms and make data publicly available to show whether a stablecoin is “truly stable.”
Editorial team finanzen.net
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