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Can Stablecoins Prevent Price Increases and Financial Instability? An Economic and Legal Perspective

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  • Sevasti–Maria Karakosta

    (National and Kapodistrian University of Athens, Greece)

  • Nikolaos A. Kyriazis

    (University of Thessaly, Greece)

Abstract

This study investigates by adopting a legal view how feasible could be for stablecoins to prevent price and financial instability. The composition, reliability and stability features of the reserves backing stablecoins as well as the consequent perspectives for acquiring the ‘legal tender’ label are examined. Adopting stablecoins as defence against inflation and financial fluctuations necessitates a common legal framework in a worldwide extent and the creation of a global common monetary union. By building on previous research and combining a legal and economic approach, this paper argues that the prerequisites for reaping the benefits from stablecoins are very difficult though not impossible to be realized.

Suggested Citation

  • Sevasti–Maria Karakosta & Nikolaos A. Kyriazis, 2025. "Can Stablecoins Prevent Price Increases and Financial Instability? An Economic and Legal Perspective," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 14(2), pages 47-61.
    • Handle: RePEc:cbk:journl:v:14:y:2025:i:2:p:47-61
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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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