Stablecoins and the Demand for Dollars

Marina Azzimonti and Vincenzo Quadrini

Richmond Fed Economic Brief, 2026, vol. 26, issue 10

Abstract: Whether stablecoins threaten or reinforce the dollar's global role depends critically on how they are backed: Reserve-backed stablecoins increase demand for U.S. Treasuries, while crypto-backed ones reduce it. As stablecoin adoption broadens, investors place greater weight on safety and liquidity, making reserve-backed issuance dominant in the long run and putting downward pressure on the natural rate of interest. What initially appears to be a challenge to the dollar can — under plausible institutional arrangements, such as those required by the GENIUS Act — become a force that strengthens it.

Keywords: Digital Assets; R* (search for similar items in EconPapers)
Date: 2026
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