Stablecoins do not live up to their name, economists and analysts at the Bank for International Settlements said in a report published on Wednesday.
“Not one of the stablecoins assessed in this paper has been able to maintain their closing prices in parity with their peg,” the paper from the international organization said. Stablecoins are usually pegged to assets like the U.S. dollar.
Stablecoins have been seen by some as an alternative form of payment. However, “to serve as a medium of exchange, they must also be able to maintain their peg during the day,” something which the report said does not happen consistently enough.
The paper looked at stablecoins like Pax Gold, USD Coin, Tether and more. It also referenced the collapse of Terra’s algorithmic stablecoin UST, that sent shockwaves throughout the crypto market and propelled losses in the sector last year.
“The lack of transparency regarding the availability and quality of these reserves may undermine trust in stablecoins’ credibility and their ability to maintain their peg,” the report said.
Moody’s Analytics also released an article on Monday that said fiat-backed stablecoins depegged – and lost their par with the asset they were pegged to – at least 609 times this year alone.
Read more: UK’s Tough Crypto Regulator FCA Won’t Go Easy on Stablecoins, Official Says
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