《经济周刊》稳住了大破坏者

William BlairLast week,we discussed the status of the U.S. dollar andhow we may be at a point of cyclical change, wherebyfurther dollar depreciation is likely over the coming yearsdue to a number of factors. The elephant in the room wedid not discuss was stablecoins. The topic has continued togrow, and this week (dubbed Crypto Week by the House ofRepresentatives) it gained even more attention with prog-ress on passing through Congress the GENIUS Act (Guidingand Establishing National Innovation for U.S. StablecoinsAct), the CLARITY Act (Digital Asset Market Clarity Act),and the Anti-CBDC Surveillance State Act legislation.InthisEconomics Weekly,we discuss the topic of stable-coins, what’s attractive and not attractive about them,what risks they pose, why the central bankers worryabout them, and why fiscal policymakers favor them.Four Main Types of TokensThere are four primary digital tokens emerging: crypto-currencies, stablecoins, CBDCs (central bank digital cur-rencies), and tokenized money market funds.Cryptocurrencies are a medium of exchange in selectareas, but are still not widely accepted globally. They arenot stores of value given their volatility, and it would be astretch to call them units of account. Overall, they do notadhere to the strict definition of money, even though theypurport themselves as a new form of currency. Further-more, they are not legal tender, they are backed entirely bythin air and are worth only what the next buyer is willingto pay for them. There are seemingly no barriers to entryin establishing them, they are issued by decentralizednetworks, they are highly volatile, there is little regulationaround them, and the process of mining for them con-sumes unconscionable amounts of energy that could beused for much more productive purposes.Stablecoins by contrast come in various forms but are allbacked by something (fiat/collateral/algorithm), whichhelps avoid the volatility experienced by the cryptocur-rencies. Typically, stablecoins are backed 1:1, meaningthat for every token coin in circulation, the issuer holdsan equivalent amount of a reserve asset in custody in caseof redemption.Tokenized money market funds are also similar to stable-coins. They are roughly what they say on the tin, digitalmoney market funds that are generally backed by T-billsand money market mutual funds (MMMFs). Tokenizedmoney market funds are issued by asset managers andexperience low volatility, but crucially, compared to stable-coins, are permitted to offer a yield to holders. Richard de Chazal, CFA +44 20 7868 4489CBDCs are similar but are issued by a country’s centralbank and are backed entirely by fiat. As a result, they ex-perience no volatility, as they are fully state guaranteed.Hence, stablecoins, tokenized MMMFs, and CBDCs demon-strate much more moneyness compared to cryptocurrencies.The use-cases for these tokens are as forms of currencywhere transactions are secure, rapid, anonymous, and nottracked by governments.Digital assets more generally,including CBDCs, are simply an expedient way of safelydisintermediating the banks, lowering transaction costs,and accelerating payments.Stablecoins—Still Working Out the KinksStablecoins are viewed as a solution for the unbanked andfor many inhabitants of emerging market countries whoare plagued by unstable monetary regimes, corruption,high inflation, sanctions, and capital controls. They also donot need to be mined in the same way as cryptocurrencies.The reality, however, is that there are many different typesof stablecoins, including the most secure ones that followa narrow-bank model and are backed 1:1 by Treasurys,gold, and/or MMMFs. Others can be backed by commercialbanks or soon consumer credit companies. Less secure, orriskier, ones can be backed by cryptocurrencies or othercommodities. There are even synthetic coins establishedto mimic or track the behavior of other stablecoins.The amount of risk stablecoins engender will thereforedepend on the reliability of the issuer, how regulated theyare, their ability to protect privacy and data, and the assetsused to back the coins. But even the seemingly less riskyissuers can face risk by association, just as in a traditionalbank run.Like bank runs, if there is no deposit insurance and un-insured users lose faith in one particular issuer, all coulddecide to start a run on the “bank.” This would force thecoin operators to liquidate their safe assets used to backthe coins, which in turn would cause those assets to losevalue. This would also impact other entities holding thosesafe assets and cause runs on other stablecoins deemedless risky due to guilt by association, which could resultin “depegs.”For example, Circle, which is the second-largest stable-coin operator after El Salvador–based Tether, held$3.3billion in cash, or 8% of its total reserves, at SiliconValley Bank. The company was briefly forced to depeg asthe price of USDC coin dropped to $0.88. The company 2 William Blairreaffirmed its commitment