Runs and Flights to Safety: Are Stablecoins the New Money Market Funds?

Kenechukwu Anadu (), Pablo Azar, Catherine Huang, Marco Cipriani, Thomas Eisenbach, Gabriele La Spada, Mattia Landoni, Marco Macchiavelli, Antoine Malfroy-Camine and J. Christina Wang

No SRA 23-02, Supervisory Research and Analysis Working Papers from Federal Reserve Bank of Boston

Abstract: Similar to the more traditional money market funds (MMFs), stablecoins aim to provide investors with safe, money-like assets. We investigate similarities and differences between these two investment products. Our key finding is that, like MMFs, stablecoins also suffer from “flight-to-safety” dynamics. This is manifested in net flows from riskier to safer stablecoins on days of crypto-market stress. The same flight-to-safety dynamics also characterized flows during stablecoin runs, as exemplified by the two most severe episodes in 2022 and 2023. Furthermore, as flight-to-safety flows occur within MMF families, stablecoin flows tend to occur within blockchains.

Keywords: money market mutual funds; financial stability; runs; liquidity transformation; crypto assets; stablecoins (search for similar items in EconPapers)
JEL-codes: G10 G20 G23 (search for similar items in EconPapers)
Pages: 56
Date: 2025-06-01
New Economics Papers: this item is included in nep-mon and nep-pay
Note: First version August 2023
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Related works:
Working Paper: Runs and Flights to Safety: Are Stablecoins the New Money Market Funds? (2024)
Working Paper: Runs and Flights to Safety: Are Stablecoins the New Money Market Funds? (2023)
Working Paper: Runs and Flights to Safety: Are Stablecoins the New Money Market Funds? (2023)
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