On par: a money view of stablecoins

Iñaki Aldasoro, Perry Mehrling and Daniel H. Neilson

Journal of Financial Market Infrastructures

Abstract: This paper presents a money view analysis of the recent crypto innovation of stablecoins, which have seen a remarkable rise as well as some spectacular collapses. By analogizing on-chain with offshore, and developing an extended analogy of stablecoins with Eurodollars, we reveal the primitive character of the existing on-chain liquidity mechanisms that support the promise of par settlement by existing on-chain stablecoin models. Liquidity, not solvency, is the issue confronted by par settlement.

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Working Paper: On par: A Money View of stablecoins (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:rsk:journ7:7960145

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