In search for stability in crypto-assets: are stablecoins the solution?

Dirk Bullmann, Jonas Klemm and Andrea Pinna

No 230, Occasional Paper Series from European Central Bank

Abstract: Stablecoins claim to stabilise the value of major currencies in the volatile crypto-asset market. This paper describes the often complex functioning of different types of stablecoins and proposes a taxonomy of stablecoin initiatives. To this end it relies on a novel framework for their classification, based on the key dimensions that matter for crypto-assets, namely: (i) accountability of issuer, (ii) decentralisation of responsibilities, and (iii) what underpins the value of the asset. The analysis of different types of stablecoins shows a trade-off between the novelty of the stabilisation mechanism used in an initiative (from mirroring the traditional electronic money approach to the alleged introduction of an “algorithmic central bank”) and its capacity to maintain a stable market value. While relatively less innovative stablecoins could provide a solution to users seeking a stable store of value, especially if legitimised by the adherence to standards that are typical of payment services, the jury is still out on the potential future role of more innovative stablecoins outside their core user base. JEL Classification: E42, L17, O33

Keywords: crypto-assets; distributed ledger technology; electronic money; stablecoins (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-ban and nep-pay
Note: 3679451
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (66)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbops:2019230

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