Stablecoins, money market funds and monetary policy

Iñaki Aldasoro, Massimo Ferrari Minesso, Leonardo Gambacorta, Maurizio Michael Habib and Giulio Cornelli

No 2987, Working Paper Series from European Central Bank

Abstract: Using a new series of crypto shocks, we document that money market funds’ (MMF) assets under management, and traditional financial market variables more broadly, do not react to crypto shocks, whereas stablecoin market capitalization does. U.S. monetary policy shocks, in contrast, drive developments in both crypto and traditional markets. Crucially, the reaction of MMF assets and stablecoin market capitalization to monetary policy shocks is different: while prime-MMF assets rise after a monetary policy tightening, stablecoin market capitalization declines. In assessing the state of the stablecoin market, the risk-taking environment as dictated by monetary policy is much more consequential than flight-to-quality dynamics observed within stablecoins and MMFs. JEL Classification: E50, F30

Keywords: Bitcoin; crypto; monetary policy shocks; money market funds; stablecoins (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fdg, nep-fmk, nep-mon and nep-pay
Note: 334027
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2987~1919e51abf.en.pdf (application/pdf)

Related works:
Journal Article: Stablecoins, money market funds and monetary policy (2025)
Working Paper: Stablecoins, money market funds and monetary policy (2024)
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:ecb:ecbwps:20242987

Access Statistics for this paper

More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().