Dollar Stablecoins Reinforce US Currency Dominance
A report from the Federal Reserve Bank of Kansas City suggests that dollar-pegged stablecoins are more likely to strengthen the U.S. dollar's global position than undermine it.
The analysis, authored by Circle executive Gordon Liao and economists Eswar Prasad and Tony Zhang, points to the dominant role of dollar-based stablecoins in cross-border payments as a key factor.
About 98% of stablecoins are denominated in U.S. dollars, with global users overwhelmingly preferring dollar-pegged assets over euro- or yuan-based alternatives for international transactions.
The report highlights that stablecoin issuers typically hold most of their reserves in short-term U.S. Treasurys and cash-equivalent assets, creating a direct link between stablecoin adoption and demand for U.S. government debt.