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Facebook’s proposal Libra, now renamed as Diem, in June 2019 rose from the ashes of the cryptobubble of 2018 and is a stablecoin with serious potential to emerge as a mon-etary alternative with scale (Arner, Auer, & Frost, 2020, pp. 5-6). Facebook with its mas-sive network of users would enjoy of course largescale network effects and would be able to successfully launch their stablecoin on a global scale that no central bank would be able to. Stablecoins such as Facebook’s Libra aimed to address the shortcomings of cryptocur-rencies such as Bitcoin that have shown to be extremely volatile in value (Arner, Auer, & Frost, 2020, p. 6) and aim to keep a stable value as indicated per the name. Stablecoins are the bridge between fiat currencies and DLT that aim to fill in the gaps that crypto-currencies have left blank (Arner, Auer, & Frost, 2020, p. 6). To preserve a stable value such stablecoins are backed with currencies, assets or other cryptocurrencies (so-called asset-linked stablecoins) or use algorithms to increase or decrease the supply of the stablecoin in response to change in demand (algorithm-based stablecoins) (Arner, Auer, & Frost, 2020, p. 6). This may sound ideal in theory, however it is yet to be seen if these stablecoins are actually able to hold a stable value and how much backing these stable-coins do actually have; these issues will be further discussed in a latter portion of this paper. Facebook’s initial proposal Libra triggered immediate reaction of central banks and reg-ulatory authorities as it would have posed a potential threat to monetary sovereignty and financial jurisdiction (Fantacci & Gobbi, 2020, p. 3). However, the project has since been then postponed and redesigned as a more traditional payment network (Fantacci & Gobbi, 2020, p. 3). Nonetheless, stablecoins and similar initiatives such as Libra are popping up and this trend is not stoppable and central banks should not sleep on this threat to their monetary sovereignty. Facebook’s Libra has really been a wake-up call to many central banks and since Libra central banks’ research globally around CBDCs has been much more accelerated and intensified. While the Libra was a permissioned blockchain-based system based on stablecoin backed by a basket of assets, the Diem will be backed only by the USD (Solberg Söilen & Benhayoun, 2021, p. 5). This move was most probably done in order to appease the FED, so that the FED will see Facebook’s currency as less of a threat to their own monetary sovereignty and feel less pressure to compete (Solberg Söilen & Benhayoun, 2021, p. 5). It may be true that the FED has successfully fended off Facebook for now, however, it is only a matter of time until other big tech giants come up with their own currency that may as well easily threaten the FED’s monetary market. Thus, it is probably in the best interest of the FED to research and look into testing their own CBDC as soon as possible, in order to protect their own market of such tech giants that enjoy massive network effects and have the needed technical know-how to launch their own virtual currency in no time. Though stablecoins may seem to encroach on the monetary sovereignty of central banks, it is still important to note that these are in the end privately issued cryptocurrencies and may be unable to provide value stability and may invole other risks (Náñez Alonso, Echarte Fernández, Sanz Bas, & Kaczmarek, 2020, p. 3). On the other hand, CBDCs would be full legal tenders and risk-free just as cash is, and thus would not be perfectly replaceable or even compareable to stablecoins. However, it still remains to be seen how these stablecoins perform in the future, as the market is still in its infancy and not enough research and data is available at this point, and especially in Facebook’s case, the launch of Diem should be an exciting project to keep an eye out for. 3.2. Chinese Retail CBDC China has been at the very forefront when it comes to research and rollout of CBDCs. According to Chorzempa (2021, p. 104) China has had a dedicated research team to fo-cus on digital currencies since 2014 and from 2016 on China has had a “strategic goal” of launching a CBDC. Interestingly enough, the Chinese government has been asserting much more control over other digital currencies (Chorzempa, 2021, p. 104) probably due to the government’s own goals of launching their digital currency and not wanting to lose control to private competitors. Such a sense of loss of control is not only felt by the Chinese central bank but is generally shared by many central banks thanks to the boom of cryptocurrencies and the icreasingly cashless society that we live in, in which the central bank has less and less control over money supplies and thus is also slowly losing grasp on monetary policies. However, it remains to be seen if CBDCs are to be used as such a monetary policy tool to combat cryptocurrencies that are encroaching upon the central bank’s territory or is just a secondary motivation. The e-CNY will operate on a two-tier level (Li & Huang, 2021, p. 70), meaning that the population would not be having deposit accounts directly at the central bank but rather at commercial banks and the central bank would just issue these e-CNY to the commercial banks. In this two-tier model, the risk of bank disintermediation is somewhat minimised as the commercial banks clearly have a role to play in this world of CBDCs. Interestinngly enough, the Chinese government strives to fully replace M0 (cash) with this new e-CNY in the future (Li & Huang, 2021, p. 71). However, it is not specified anywhere what exact timeframe the PBOC is trying to follow in order to replace their M0 fully with their digital currency. Furthermore, it will be quite interesting to see, how the testing during the winter Olympics 2022 of the e-CNY has influenced the mass-rollout of the CBDC (Randhawa, 2020, p. 7). Even though it may not be a race who launches their retail CBDC first successfully, but all eyes will be on whoever may succeed in this endeavour as they may lead into this new era of finance. China may well be the ideal candidate for a mass rollout of a retail CBDC, as the country already has a highly developed mobile payment market with companies such as AliPay and WeChatPay dominating the market while cash usage is in decline, so it makes perfect sense to replace cash with a virtual Yuan as well. The Chinese market has shown its ability to quickly adapt in the past and may continue to prove to do so with CBDCs. Of course, the biggest concern with this e-CNY is the financial disintermediation of commercial banks as well as AliPay and WeChatPay and that is exactly why the Chinese government has opted for the two-tier model in order to minimise such disintermediation effects as much as possible by giving commercial banks the possibility to be involved in the process and be able to develop their own wallets and apps for the population (Li & Huang, 2021, p. 73). In its core design, the e-CNY would function quite similarly to mobile payments, however, the CBDC would be legally compensable, achieve true zero cost, would not have to rely on network effects and could be anonymous (at least to a certain degree) (Li & Huang, 2021, p. 72). Even though there may be arguments that there are enough differences between the e-CNY and mobile payments that they may coexist, some replacement effect seems unavoidable. The e-CNY is programmable and can be consequently completely monitored (Randhawa, 2020, p. 5), which is a great feat technologically for money to be able to do so but may raise a red flag in other parts of the world if other central banks may want to follow in the PBOC’s footsteps. 3.3. Private Stablecoins Stablecoins, as their name may already indicate, are a financial instrument as previously mentioned in section 3.1. that has the goal to minimise volatility and maintain a stable value relative to a specified asset or a pool or basket of assets (BIS, 2021, p. 20). Stable-coins were mainly created to overcome the shortcomings of first-generation cryptocur-rencies such as Bitcoin that suffer from extreme volatility and thus are more of a specu-lative financial asset (Amato & Fantacci, 2020). Following Fantacci & Gobbi (2020, pp. 5-7) privately issued stablecoins are classified as follows: Even though privately issued stablecoins aim to maintain a stable value, it is not fore-seeable that they are able to replace official currencies (Fantacci & Gobbi, 2020, p. 7). Thus, these stablecoins are not entirely in perfect competition to CBDCs which would be a perfect replacement to fiat currency cash. Not only are stablecoins a rather small mar-ket and a market in its infancy up to date, it also still remains to be seen whether they are actually able to maintain stable values even in times of extreme financial distress. Furthermore, depending on the nature of the assets backing the stablecoins such as on-chain backing they may not only be unable to maintain a stable value but may introduce completely new risks (Náñez Alonso et al., 2020, p. 3). Even though stablecoins may not be able to replace fiat currency, Segal-Knowles (2021) argues that stablecoins could potentially serve as a substitute for commercial bank deposits. As with the decline of cash usage and increase in commercial bank card usage (i.e. commercial virtual money usage), it is definitely believable that, if stablecoins prove themselves to be actually less volatile than their first-generation cryptocurrency counterparts, could serve in the future as a reliable replacement for commercial bank deposits as it really does not make a difference for the retail customer if he or she would be able to get the same services and results at the end of the day and maybe stablecoins could actually even be used to discipline commercial banks and their moral hazard problems of the past decades, which has led to a loss of confidence in these institutions. The success of stablecoins also depends on their ability as a means of payment which relies on the core functions performed by the stablecoin arrangements (BIS, 2021, p. 4). At least for commercial bank deposits they have proven themselves as a means of payment, while it still remains to be seen if the same can be said about stablecoins. As of yet, it is not possible in our day to day lives to make transactions using stablecoins or readily convert such stablecoins into fiat currency; which is a big downside to them as of now. However, it is only a matter of time until such technological changes will be made in our lives and maybe sometime soon it will be made easier to make such daily transactions using stablecoins rather than commercial bank deposits.