Beyond Speculation: Payment Stablecoins for Real-time Gross Settlements

Abstract

This study presents empirical evidence that shows a notable shift in the usage of stablecoins, a form of digital currency transacted over distributed ledgers, in recent years. Initially, stablecoins started out as on-chain cash balances for crypto exchanges and traders, but they have evolved over the past few years to resemble a form of general-purpose money tokenized on public blockchains. Payment stablecoins, a type of stablecoin fully backed by high quality and liquid assets, are used proportionally less in crypto trading than fiat dollars are used in the trading of traditional assets. The adoption of digital token money such as payment stablecoins for general use in real-time gross settlement (RTGS) could potentially mitigate risks associated with concentration and liquidity in the current payment systems. Greater integration of payment stablecoins with fiat payment rails, through appropriate regulation and limited access to central bank accounts, can preserve the singleness of money and mitigate against financial stability concerns.

Keywords: Payment stablecoin, Digital currency, Settlement systems, RTGS

JEL Classification: G1, G2, G21, G23, G28, E42, E49, E40