Adoption of stablecoins proves popular. Money has been used in many forms over the centuries, ranging from seashells to metal coins, and in more recent times bank notes made from paper as well as plastic.

Now the digital era is set to redefine the features of money and the ways in which it is used.

Almost overnight, the world has started to talk about stablecoins, a new form of digital currency fully backed or collateralized by a country’s fiat currency – money that the government declares to be legal tender.

Stablecoins can also be viewed as an electronic version of fiat money, or e-money, as defined by the International Monetary Fund. Different from their predecessor Bitcoin, which appeared a decade ago, their value is linked to a pool of assets that can ensure a stable price for these “coins”.

Experts said that compared with Bitcoin and other cryptocurrencies, stablecoins may be more capable of acting as a means of payment and method of stored value.

So why has the adoption of stablecoins been so rapid and widespread?

Tobias Adrian, a financial counselor and director of the IMF’s Monetary and Capital Markets Department, said their value is stable compared with a fiat currency, and transactions are convenient, nearly costless and faster than card payments.

“E-money is better integrated into our digital lives, and often issued by companies that fundamentally understand user-centered design and integration with social media,” Adrian said.

Given these advantages, not only privately owned technology companies, but also government officials worldwide are rushing to announce that they will soon introduce their own form of stablecoins.

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