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Stablecoins and Central Bank Digital Currencies: Policy and Regulatory Challenges

Author

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  • Barry Eichengreen

    (University of California, Berkeley)

  • Ganesh Viswanath-Natraj

    (University of Warwick)

Abstract

Stablecoins and central bank digital currencies are on the horizon in Asia, and in some cases have already arrived. This paper provides new analysis and a critique of the use case for both forms of digital currency. It provides time-varying estimates of devaluation risk for the leading stablecoin, Tether, using data from the futures market. It describes the formidable obstacles to widespread use of central bank digital currencies in cross-border transactions, the context in which their utility is arguably greatest. The bottom line is that significant uncertainties continue to dog the region's digital currency initiatives.

Suggested Citation

  • Barry Eichengreen & Ganesh Viswanath-Natraj, 2022. "Stablecoins and Central Bank Digital Currencies: Policy and Regulatory Challenges," Asian Economic Papers, MIT Press, vol. 21(1), pages 29-46, Winter/Sp.
    • Handle: RePEc:tpr:asiaec:v:21:y:2022:i:1:p:29-46
    DOI: 10.1162/asep_a_00843
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    References listed on IDEAS

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    1. Filip Hampl & Lucie Gyönyörová, 2021. "Can Fiat‐backed Stablecoins Be Considered Cash or Cash Equivalents Under International Financial Reporting Standards Rules?," Australian Accounting Review, CPA Australia, vol. 31(3), pages 233-255, September.
    2. Richard K. Lyons & Ganesh Viswanath-Natraj, 2020. "What Keeps Stablecoins Stable?," NBER Working Papers 27136, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Philippe Bergault & Louis Bertucci & David Bouba & Olivier Gu'eant & Julien Guilbert, 2024. "Automated Market Making: the case of Pegged Assets," Papers 2411.08145, arXiv.org.
    2. Jin, Feng & Li, Jingwei & Xue, Yi, 2023. "Preferring stablecoin over dollar: Evidence from a survey of Ethereum platform traders," Journal of International Money and Finance, Elsevier, vol. 131(C).
    3. Lyons, Richard K. & Viswanath-Natraj, Ganesh, 2023. "What keeps stablecoins stable?," Journal of International Money and Finance, Elsevier, vol. 131(C).

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