Eclipsing the pyramid: stablecoins and settlement

Clément Berthou and Xavier Lavayssière

Journal of Financial Market Infrastructures

Abstract: A “settlement eclipse†occurs when the settlement function of a layer of the monetary pyramid is occulted by the layer beneath it. It arises when a financial institution or a payment and settlement system internalizes transfers at sufficient scale. This paper formalizes this concept, discusses its consequences and applies it to stablecoins. The capacity of stablecoins to circulate globally without redemption has an “eclipsing†potential. This property results from the combination of three features: a bearer claim; a digital platform enabling peer-to-peer transfers; and a secondary market ecosystem. These features make stablecoins simultaneously more operationally autonomous from the traditional monetary pyramid and more structurally concentrated. The paper also examines policy options and the potential emergence of a tokenized monetary pyramid. Whether that pyramid acquires a direct public anchor or remains structurally subordinate to the traditional one is an institutional and political choice rather than a technological one, with direct consequences for financial stability, monetary policy transmission and the distribution of systemic risk.

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