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Comment by advisedwang | Hacker News Reader

Remember how in the 19th each bank to issued their own currencies? I wonder why that got banned...

Don't be fooled by the name. It is not a currency. It's a "digital asset" which is something which is both well defined in French law and has to follow strict regulation regarding its backing. At the end of the day, it's euro-denominated and euro-backed.

It's actually interesting when it comes to smart contract. As far as I know, this is probably the safest collateral existing nowadays.

Were they also running the currencies on a publicly viewable, worldwide distributed ledger? Could you see exactly where it went and where it came from?

Something is telling me this is a bit different, compared to 19th century banks

Except the assets that maintain the stability of their stablecoin are stored off-chain and we will have to trust someone’s word that they exist in sufficient quantities.

Trust in a bank's stablecoin obviously tied to trust in that bank's stability in general. So this particular problem is reduceable to the one we've been having all the time banks exist.

I have a feeling checking that a bank indeed stores the amount or X coins that they’ve minted on the network should be an easy audit. Although non-crypto digital money nowadays is a mess so I’m not even sure if that’s possible.

There is no need to audit the liabilities (i.e. the stablecoin issued), what matters are the assets/reserves.

And since these by nature are not on-chain for a fiat currency backed stablecoin, this is not trivial at all: Not only do you need to plausibly demonstrate the existence of assets, but also that they are not otherwise encumbered.

That’s what I meant, how do audit reserves when it’s most likely a digit in the bank account database? You’d have to audit their accounts at all banks including central banks. If only banks used crypto :))

In this case, you have trust one of the largest bank of France and the French authority auditing it (these are regulated assets when it comes to backing). That feels to me a bit safer than some random company in a tax-haven.

It comes a bit late sadly.

Don't worry about them.

They were involved in the Libor things

They were involved in lybian government funds scandals

They had 2.6B of settlement in the USA for these cases.

They were involved in Panama papers

They once lost pocket money in risky investments (4.82 billion EUR) before the subprimes hit them (2.1B) (see the Kerviel case)

So I wouldn't trust them if they said they were the most socially responsible company out there.

But I trust them more than meme makers at FTX to back a stablecoin.

Thats not relevant. You are seeing only the stablecoin side of the ledger but not the euro side. It could be that they issued far more stable coins than euros in their reserve.

An analogy would be the 19th century bank publishing the list of people holding its money. Not terribly useful

Banknotes in Scotland are still issued by retail banks. https://en.wikipedia.org/wiki/Banknotes_of_Scotland

But

> the law requires that the issuing banks hold a sum of Bank of England banknotes or gold equivalent to the total value of notes issued

Mostly because of economic theories that turned out to be empirically wrong during the 20th.

Most countries where free banking was the norm had very stable financial systems. https://en.wikipedia.org/wiki/Free_banking

Note that the United States never had free banking.

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