> Does yield get treated the same around the world? Do banks have the same fears around the world? What’s different and why?
I think the case here that you might want to think about is how banks and their relationship to their local government institution. The basic difference I can think of is having a variable yield rate dependent on market conditions like a Money Market in USD vs a government who controls this, and sets rates (or manipulates the market).
Even government bond prices around the world are (broadly) set by auction which is a market construct. So I'd hardly call it controlled/manipulated by the government.
my current thinking is that yield bearing stables in a specific market creates a schism between the government and the bank that will be more pronounced than in the US; there's a way this goes where banks hate it even though governments love it. Sovereign stables create more demand and more on-chain demand for local government bonds, and make it easier for governments to finance themselves while draining capital from the local economy, particularly by via the banks.
Q4) Is there room for a sovereign stablecoin if the country already has an instant rail? Are the presence of limits the constraint? Why would someone who lives there choose to hold the local currency in fiat vs. onchain? What advantages would need to exist.
A4) Nigeria has an instant Stablecoin - however, with the FX restrictions in Nigeria, the Naira-based stablecoins exist as a way to build stablecoin liquidity for swaps, enable the importers and cross-border traders easier on/off ramps, as well as treasury management on chain. The NGN-based stablecoins also act as an easier way to acquire USD stablecoins for smaller players due to the FX volatility as they can easily stack stablecoins and then swap for USD-based ones when exporting, thus helping with their liquidity, especially if their incomes are in NGN and their expenses are one-time USD expenses.
Q6) Does yield get treated the same around the world? Do banks have the same fears around the world? What’s different and why?
A6) Yes. USD-based stablecoins have caused currency flight and volatility in Nigeria. - at least that's what the government believes. The existence of NGN-based Stables may quell those concerns.
> Does yield get treated the same around the world? Do banks have the same fears around the world? What’s different and why?
I think the case here that you might want to think about is how banks and their relationship to their local government institution. The basic difference I can think of is having a variable yield rate dependent on market conditions like a Money Market in USD vs a government who controls this, and sets rates (or manipulates the market).
Even government bond prices around the world are (broadly) set by auction which is a market construct. So I'd hardly call it controlled/manipulated by the government.
my current thinking is that yield bearing stables in a specific market creates a schism between the government and the bank that will be more pronounced than in the US; there's a way this goes where banks hate it even though governments love it. Sovereign stables create more demand and more on-chain demand for local government bonds, and make it easier for governments to finance themselves while draining capital from the local economy, particularly by via the banks.
Q4) Is there room for a sovereign stablecoin if the country already has an instant rail? Are the presence of limits the constraint? Why would someone who lives there choose to hold the local currency in fiat vs. onchain? What advantages would need to exist.
A4) Nigeria has an instant Stablecoin - however, with the FX restrictions in Nigeria, the Naira-based stablecoins exist as a way to build stablecoin liquidity for swaps, enable the importers and cross-border traders easier on/off ramps, as well as treasury management on chain. The NGN-based stablecoins also act as an easier way to acquire USD stablecoins for smaller players due to the FX volatility as they can easily stack stablecoins and then swap for USD-based ones when exporting, thus helping with their liquidity, especially if their incomes are in NGN and their expenses are one-time USD expenses.
Q6) Does yield get treated the same around the world? Do banks have the same fears around the world? What’s different and why?
A6) Yes. USD-based stablecoins have caused currency flight and volatility in Nigeria. - at least that's what the government believes. The existence of NGN-based Stables may quell those concerns.