A Framework for Understanding the Vulnerabilities of New Money-Like Products

Kenechukwu Anadu (), Patrick E. McCabe, Jp Perez-Sangimino and Nathan Swem
Additional contact information
Patrick E. McCabe: https://www.federalreserve.gov/econres/patrick-e-mccabe.htm
Nathan Swem: https://www.federalreserve.gov/econres/nathan-swem.htm

No SRA 26-01, Supervisory Research and Analysis Working Papers from Federal Reserve Bank of Boston

Abstract: New money-like products, such as tokenized money market funds (MMFs), money market exchange-traded funds (MMETFs), and stablecoins, could be transformative for finance. These products may offer significant benefits, but like other money-like assets, they also have certain vulnerabilities. We introduce a framework to analyze the vulnerabilities of new products by comparing their features to those that contribute to vulnerabilities in MMFs. Specifically, we examine the extent to which each product engages in liquidity transformation, is subject to threshold effects, serves as a money-like asset, poses contagion risks, and has reactive investors. Our framework is useful for assessing the potential effects of novel cash-like products on the overall resilience of the financial system and how such an assessment may change as these products’ uses evolve.

Keywords: stablecoins; money market funds; exchange-traded funds; financial stability; liquidity transformation; contagion (search for similar items in EconPapers)
JEL-codes: E50 G1 G23 (search for similar items in EconPapers)
Pages: 42
Date: 2026-01-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.bostonfed.org/publications/risk-and-po ... y-like-products.aspx Summary (text/html)
https://www.bostonfed.org/-/media/Documents/Workingpapers/PDF/2026/SRA2601.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedbqu:102319

Ordering information: This working paper can be ordered from

DOI: 10.29412/res.wp.2025.14

Access Statistics for this paper

More papers in Supervisory Research and Analysis Working Papers from Federal Reserve Bank of Boston Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Spozio ().