Private money and public debt. U.S. Stablecoins and the global safe asset channel

Massimo Ferrari Minesso and Daniele Siena

No 3174, Working Paper Series from European Central Bank

Abstract: This paper studies the international macro-financial implications of U.S. dollar-backed payment stablecoins. These digital assets create a new global safe asset channel that links private money creation and global payment needs directly to U.S. public debt. By reshaping the demand for safe assets and the geography of dollar intermediation, stablecoins transform the dynamics of global financial markets, generating new trade-offs, also for the U.S.: even if they widen the dollar’s global footprint and compress U.S. risk-free yields, they entail non-trivial macro-financial costs. Stablecoins dampen the domestic real effects of U.S. monetary policy and increase both U.S. and foreign exposure to cross-country shocks, making a more digital, dollar-centric reserve system less stable. These effects are limited at low adoption levels but rise non-linearly with stablecoin capitalization, reshaping the functioning of the international financial system. JEL Classification: G15, E42, E44, E52, F3

Keywords: financial stability; global safe asset; monetary policy; spillovers; stablecoins (search for similar items in EconPapers)
Date: 2026-01
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20263174

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