The level playing field of payment services could be undermined by the widespread use of stablecoin network, according to Maria Teresa Chimienti, market infrastructure expert at the the European Central Bank.
Stablecoins are often seen as the more respectable face of crypto. Pegged to fiat currencies or other assets, they are free from the price volatility that afflicts cryptocurrencies like Bitcoin.
However, according to Chimienti, they could jeopardise financial stability and monetary sovereignty, through curbing competition if stablecoin networks begin to feature more prominently in cross-border payments and day-to-day transacting.
"This could alter the payment landscapes," she says, speaking at EBAday 2020's 'Welcome to era of stablecoins' virtual panel.
"Stablecoin initiatives would benefit the competitive advantage of Big Tech business models as they would control the critical infrastructure for commerce, economic activity and the large pools of customer data."
Were restrictions to be placed on access to the critical infrastructure by third parties, the level playing field of payment services would be undermined, Chimienti claims.
She therefore believes that maintaining a contestable market should be the priority of regulatory bodies, with a focus on data and competition law.
Matters of integration and interoperability between networks must also be looked at in order to prevent fragmentation of the market.
Jon Isaksen, policy officer of the European Commission, believes that this demonstrates the opportunities for financial services companies to contribute in this space.
"We're trying to come up with a bespoke enabling framework to facilitate this," he says.
"It's important that as consumers, we have trust in there being a European framework that manages risk so we can enjoy the opportunities."
Also speaking as part of this panel were Alessandro Agnoletti, head of innovation at SIA, and Alfonso Ayuso Calle, head of regulation and public policy at Banco Sabadell.
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