Christian Catalini, the chief economist of Diem (formerly Libra) said that the recently announced Diem USD stablecoin is only intended as an interim step until the U.S. Federal Reserve issues a central bank digital currency (CBDC) or digital dollar.
“Diem has committed to fading out, for example, Diem dollar, if there were such a thing as a digital dollar issued by the Fed,” said Catalini talking at Consensus 2021. “The public sector has a large comparative advantage in developing anything that has to do with stability, money, value preservation and macroprudential policy. We don’t want to change that. In fact, we want to build on and take advantage of that infrastructure to accelerate use cases for consumers both domestically and also globally.”
A key reason why Diem would be willing to do that is it won’t rely on interest income on the reserves that back the stablecoin. Those reserves will mainly be in the form of Treasuries with maturities of less than 90 days. Instead, Diem will generate revenues from transaction fees which it claims will be very cheap, at less than 0.1%.
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
