An alternative to CBDCs

There’s a lot of unknowns surrounding this topic, so bear with me.

Instead of having a single official USD stablecoin issued by the federal reserve, wouldn’t it make more sense to have banking institutions issue their own USD-pegged stablecoins?

Stableswap AMMs could allow for low slippage trades between them when making purchases, and this could all be done in the background without requiring any thought from the purchaser or merchant (the particular AMM/aggregator could be left up to the payment processor). Liquidity pools would serve as money markets between these tokens, allowing liquidity providers to pick and choose based on the risks involved with each bank in question.

Here’s where things get interesting. If a bank run were to occur, the risk should be sandboxed to a certain degree, resulting in a temporary depeg. As long as the bank is FDIC insured, most members would choose to wait, leaving their funds in that stablecoin, and others may choose to assume the risk by arbitraging the price difference.

Just something I’ve been thinking about. Let me know if you guys have any feedback.

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