Both the tokenized Stablecoins and Central Bank Digital currencies look to improve the digital payment systems but they are built on different principles. They are usually seen by some as competitors but there is a big chance that they can coexist and serve different functionality in the financial systems.

Key Differences Between Central Bank Digital currencies  and Stablecoins

State-backed Central Bank Digital currencies  are issued by the state and sponsored by a central bank for safety and stability. They are within the ambit of national monetary policy and may also enable safe state-backed transactions. Stablecoins such as Qardun, on the other hand, are produced by entities other than states and are normally pegged against fiat currencies, commodities, or cryptocurrencies. Flexibility supports innovations, particularly across borders for settlements and in DeFi.

Potential for Coexistence

Although they are unlike each other, Central Bank Digital currencies  and stablecoins can exist together instead of being in competition with one another. Governments can take advantage of the innovations of stablecoins while reserving regulatory power with Central Bank Digital currencies . Official payments can be made using Central Bank Digital currencies , for instance, while stablecoins like Qardun can still thrive in DeFi as well as peer-to-peer payments. Even central banks are looking into hybrid models whereby stablecoins are used under a Central Bank Digital Currency framework.

Challenges to Their Coexistence

Regulatory problems are a major challenge. Unregulated stablecoins have the potential to destabilize the financial system and be employed in criminal activities, as governments have cautioned, which has led to strict regulation. For others, the anonymity problems surrounding Central Bank Digital currencies —considering that central banks would be tracking all transactions—may make stablecoins more attractive to some clients.

Lastly, both forms of digital money are still in their early stages of evolution. While Central Bank Digital currencies  are secure and regulated, stablecoins promote flexibility and innovation. The economic landscape is ready to be able to accommodate both, each serving different purposes in the digital economy.