Stablecoins, Inflation and the Settlement Hierarchy (Martin Summer)

Martin Summer ()
Additional contact information
Martin Summer: Oesterreichische Nationalbank, Economic Studies Division, http://www.oenb.at

Working Papers from Oesterreichische Nationalbank (Austrian Central Bank)

Abstract: Would widely adopted stablecoins affect the price level, and through which channels? We analyse this question in the monetary general-equilibrium framework of Dubey and Geanakoplos, in which payment capacity—money, bank credit and the spendable share of government bonds—determines nominal outcomes. Stablecoins backed by government debt open a channel of inflationary finance: the existing bond stock becomes spendable (a stock effect) and newly issued debt arrives spendable (a flow effect), with the price level rising in the payment capacity so created and in the breadth of adoption. Monetary policy can offset the rise, but only at the cost of suppressing the trade that bank credit finances. Beyond these bounded effects, current regulatory design does not close an escalation path on which stablecoins become a competing outside money, putting nominal determinacy at risk. Whether these effects materialise is largely a policy choice: they require adoption in ordinary payments, which regulation currently shapes.

Keywords: stablecoins; inflation; public and private money; monetary architecture (search for similar items in EconPapers)
JEL-codes: D52 E31 E42 E44 G21 G28 (search for similar items in EconPapers)
Pages: 84
Date: 2026-09-03
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.oenb.at/dam/jcr:95152e3b-1d40-462c-a369-2782908130de/wp-280.pdf (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:onb:oenbwp:280

Ordering information: This working paper can be ordered from
Oesterreichische Nationalbank, Economic Studies Division, POB 61, A-1011 Vienna, Austria

Access Statistics for this paper

More papers in Working Papers from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Markus Knell ().