March 2021

Global Stablecoins: Monetary Policy Implementation Considerations from the U.S. Perspective

Matthew Malloy and David Lowe

Abstract:

This note explores the potential effects of the widespread adoption of a global stablecoin (GSC) on key aggregate financial sector balance sheets in the United States. To do this, we map out cash flows of GSC transactions among financial sector entities using a stylized set of 't-accounts'. By analyzing these individual transactions, we infer aggregate and compositional effects on U.S. commercial banking sector and Federal Reserve balance sheets. Through this lens, we also consider how these balance sheet changes could affect monetary policy implementation, the demand for central bank reserves, and the market for U.S. dollar safe assets.

DOI: https://doi.org/10.17016/FEDS.2021.020

PDF: Full Paper

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Last Update: March 22, 2021