Last week, Richard de Chazal discussed the status of the U.S. dollar and how we may be at a point of cyclical change, whereby further dollar depreciation is likely over the coming years due to a number of factors. The elephant in the room he did not discuss was stablecoins. The topic has continued to grow, and this week (dubbed Crypto Week by the House of Representatives) it gained even more attention with progress on passing through Congress the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), the CLARITY Act (Digital Asset Market Clarity Act), and the Anti-CBDC Surveillance State Act legislation.
In this Economics Weekly, de Chazal discusses the topic of stablecoins, what’s attractive and not attractive about them, what risks they pose, why the central bankers worry about them, and why fiscal policymakers favor them.