A Detailed Dive Into Stablecoins #015

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Hello crypto friends,

I trust you are all doing perfectly fine and are enjoying your activities in the community.

I am here again to discuss with you on a topic of great importance in the cryptospace and I believe you are all ready for me.

Without wasting much of our time, lets begin our discussion on the advantages of fiat currency.

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ADVANTAGES OF FIAT CURRENCY

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There are several advantages of fiat currency in our world today and we shall be learning some of them.

• MONETARY POLICY:

In our last post, we discussed about what monetary policies are and today, we shall be learning how monetary policy has proven to be an advantage of fiat currency, please stay tuned.

EXCHANGE RATE MANAGEMENT

Through the use of fiat currency, governments are allowed to manage their exchange rate.

Through the intervention of foreign exchange, the government can have an influence of the value of their currency in the international market.

And this is very important in the maintainance of competitiveness in global trade and management of trade balance.

LENDER OF LAST RESORT

With fiat currency at their disposal, central banks can serve as lenders of last resort during financial crisis.

They can help to prevent bank runs and financial panics in the banking system by providing liquidity into the banking system.

And this is very important for the maintenance of confidence in the financial systems.

MONETARY POLICY INDEPENDENCE

Central banks are often granted a degree of independence by the government to conduct monetary policy.

With this separation, central banks are shielded from political pressure, and this ensures that monetary policy decisions are made in favour of the economy rather than for political gain.

TRANSACTION EFFICIENCY

A more transaction efficiency is being offered with the use of fiat currency.

It is easy to transport, it is universally accepted and can be quickly divided into smaller denominations.

And these useful qualities makes it a very much preferred medium of exchange for most transactions.

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CONCLUSION

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We have explained Interesting advantages of fiat currency and how it is being used.

In our next discussion, we shall learn more about fiat currency.