Are Stable Coins Stable?

Notes on the 21st Century (CBRi), 2019

10 Pages Posted: 12 Feb 2019 Last revised: 25 Mar 2021

See all articles by Usman W. Chohan

Usman W. Chohan

UNSW Business School; Critical Blockchain Research Initiative (CBRI); International Association of Hyperpolyglots (HYPIA); Centre for Aerospace & Security Studies (CASS)

Date Written: March 29, 2020


Stable coins attempt to resolve the problem of wide volatility in dollar-denominated prices that characterize most cryptoinstruments, by “pegging” their value to fixed amounts of traditional monetary instruments. This discussion paper considers the challenges faced by “stable coin” cryptocurrencies, at different levels of collateralization, through comparison with pegged currencies, which follow a similar dynamic in terms of maintaining support for a given monetary value. The paper suggests that the novelty of cryptocurrencies should not detract from observing what are fundamental difficulties in constructing pegs to traditional currencies.

Keywords: Cryptocurrencies, Bitcoin, Tether, Volatility, Exchange Rates, Central Banks

Suggested Citation

Chohan, Usman W., Are Stable Coins Stable? (March 29, 2020). Notes on the 21st Century (CBRi), 2019, Available at SSRN: or

Usman W. Chohan (Contact Author)

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052

Critical Blockchain Research Initiative (CBRI) ( email )

International Association of Hyperpolyglots (HYPIA) ( email )

Montreal, Quebec

Centre for Aerospace & Security Studies (CASS) ( email )


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