In the latter, the issuer creates the tokens, sells them on the open market, and deposits the proceeds in high-quality assets. [...] The arbitrageur's actions should raise the demand for the fiat currency relative to the stablecoin and depress the stablecoin's price. [...] However, there is a problem with the second aspect: the process puts downward pressure on the price of the implicit collateral, the LUNA token, for two reasons. [...] A 2024 Primer for Digital Money 10 The Market for a CBDC and what we can learn from Toronto’s A La Cart Program In a free society, the state cannot force its citizens to use a particular payments tool, and the success of a CBDC as a payments tool will therefore be determined solely by the market. [...] The concern is that instead of focussing on the success of the CBDC in the marketplace, the government bureaucracy focusses on government needs and concerns and creates an overregulated and constrained product that the market rejects.
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