Barry Eichengreen July 14, 2021 08:50
he debate over stablecoins has come a long way since Facebook announced the creation of Libra (now rebranded Diem) almost exactly two years ago. An obscure corner of the digital sphere that was poorly understood then is now subject to increasingly intense scrutiny by central bankers, regulators, and investors. The stakes, including for financial stability, are high. Market capitalization, or circulating supply, of the four leading US dollar stablecoins alone exceeds $100 billion.
But more intense scrutiny does not mean better understanding. Start with the belief that stablecoins are intrinsically stable because they are “fully collateralized.” The question, of course, is: collateralized by what?
The stablecoin illusion: Libertarian enthusiasts will h
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