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Stablecoins and the Demand for Dollars

Author

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  • Marina Azzimonti

  • Vincenzo Quadrini

Abstract

Whether stablecoins threaten or reinforce the dollar's global role depends critically on how they are backed: Reserve-backed stablecoins increase demand for U.S. Treasuries, while crypto-backed ones reduce it. As stablecoin adoption broadens, investors place greater weight on safety and liquidity, making reserve-backed issuance dominant in the long run and putting downward pressure on the natural rate of interest. What initially appears to be a challenge to the dollar can — under plausible institutional arrangements, such as those required by the GENIUS Act — become a force that strengthens it.

Suggested Citation

  • Marina Azzimonti & Vincenzo Quadrini, 2026. "Stablecoins and the Demand for Dollars," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 26(10), March.
    • Handle: RePEc:fip:fedreb:102930
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    File URL: https://www.richmondfed.org/publications/research/economic_brief/2026/eb_26-10
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