Fiat pegged tokens have proliferated due to the inefficiencies in the current TradFi sector.
Stable coins provide liquidity and allow for easy swapping in and out of fiat. Central Governments are looking at their own centralized stablecoins called CBDC. Although the regulators are concerned about the systemic risks stable coins can have on the overall economic markets, the value of the USD stablecoins (Oct 2021) is less than $150bn. The total USD in circulation is in excess of $2 trillion. There are stable coins in other fiat currencies such as the EUR and there are others pegged, or collateralized, to fiat and non-fiat baskets. The collateral can be held by a commercial entity, and organization or other actor nn group. The collateral can be loaned, the way central banks provide lending to commercial banks. Some are interest bearing and others have elastic supply. Newer types include algo SCs, fractional basket reserves and protocal controlled value SCs (PCVs).
Stable coins should be considered "derivatives" or "synthetix" and risk managed in the same way the TradFi equivalents are.