CFA Level I · CFA Level I Exam · Introduction to Digital Assets
Which of the following is the best description of a stablecoin that is backed by reserves?
A reserve-backed stablecoin is a token whose value is pegged to a reference asset, such as a fiat currency, and supported by reserve assets. It differs from a central bank digital currency, which a central bank issues as legal tender, and from tokens created by mining.
- AA token that is mined by validators to secure a blockchain
- BA token whose value is tied to a reference asset such as a fiat currency and supported by reserve assetsCorrect
- CA token issued by a central bank as legal tender
Explanation
Reserve-backed stablecoins aim to hold a stable value by pegging to a reference asset such as a fiat currency, supported by reserves. A central bank digital currency is issued by a central bank, and mined tokens are not defined by a peg.
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