Stablecoins’ Quest for Money: Who Is Afraid of Credit?

Forthcoming in the Journal of Fintech

31 Pages Posted: 11 Oct 2021 Last revised: 8 Nov 2022

See all articles by Richard Senner

Richard Senner

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss National Bank - Financial Stability

Mathieu Chanson

affiliation not provided to SSRN

Date Written: October 11, 2021

Abstract

Classifying stablecoins into three different categories, we will see that fiat-backed stablecoins can complement today's monetary architecture by building a novel technological layer on top of the old. Non-backed stablecoins, also known as algorithmic stablecoins, in contrast, use outdated monetarist ideas to achieve price stability and are unlikely to have meaningful impact from an economic perspective. Thirdly, debt-backed stablecoins, typically collateralized with other crypto assets, come closest to achieving some form of moneyness. Coins in this category will have to increase debt universality and linkages to (digital) economic activity to gain wider acceptance - a path that is necessarily accompanied with increasing need for regulatory compliance.

This chapter concludes by providing an outlook with respect to debt-backed stablecoins collateralized with tokenized real-world-assets.

JEL Classification: E32, E51, E64, G21

Suggested Citation

Senner, Richard and Chanson, Mathieu, Stablecoins’ Quest for Money: Who Is Afraid of Credit? (October 11, 2021). Forthcoming in the Journal of Fintech, Available at SSRN: https://ssrn.com/abstract=3940320 or http://dx.doi.org/10.2139/ssrn.3940320

Richard Senner (Contact Author)

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC) ( email )

ETH-Zentrum
Zurich, CH-8092
Switzerland

Swiss National Bank - Financial Stability ( email )

Boersenstrasse 15
Zurich, CH-8022
Switzerland

Mathieu Chanson

affiliation not provided to SSRN

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