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by w10-1
319 days ago
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Stable coins are mostly backed by Treasuries, so it’s engineering instability: a run on coin redemption triggers treasury sales which raises interest rates which triggers a run on any asset backed by treasuries like coins, and so on. It’s like the 2008 crash: people speculating because they think housing never goes down, except a market-scale drop can trigger an uncontrollable rush for the exit. With banks and companies permitted to hold coins as assets, the impact is broad but impossible to regulate ex ante, and difficult to model monetarily. It’s what I would do if I were Putin and Xi, frustrated with the western controls on the banking system (that have mostly enabled us not to have to go to war). |
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Keep in mind stablecoins aren't a product built for Americans, they're built for people outside the US financial system to give them access to some of the benefits of the US's relatively solid money.