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Digital Assets and the Exorbitant Dollar Privilege

Author

Listed:
  • Marina Azzimonti
  • Vincenzo Quadrini

Abstract

This paper analyzes how the rise of digital assets, particularly stablecoins, affects the US dollar's dominance in global financial markets. It discusses whether stablecoins, backed by US debt or other assets such as cryptocurrencies, could replace traditional US safe assets. On the one hand, stablecoins could increase the demand for dollar reserves, strengthening the international role of the dollar. On the other hand, if stablecoins are backed by nondollar reserves, the global demand for dollars may decline, potentially reducing its international role.

Suggested Citation

  • Marina Azzimonti & Vincenzo Quadrini, 2024. "Digital Assets and the Exorbitant Dollar Privilege," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 153-156, May.
    • Handle: RePEc:aea:apandp:v:114:y:2024:p:153-56
    DOI: 10.1257/pandp.20241069
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    More about this item

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F30 - International Economics - - International Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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