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Stablecoins: Classification, functional features and development prospects

Author

Listed:
  • Kochergin, D.

    (St. Petersburg State University, Saint Petersburg, Russia)

  • Ivanova, A.

    (North-West Main Directorate of the Bank of Russia, Saint Petersburg, Russia)

Abstract

The article is devoted to stablecoins and their prospects for use in the financial market. The authors propose the interpretation and classification of stablecoins and analyze their functional features and development prospects. Also impact of the global economic crisis on stablecoins is analyzed. The findings illustrated that stablecoins differ from traditional electronic money, as well as classic cryptocurrencies, and they can be interpreted as hybrid digital financial assets. Currently, the commonest digital coins with a stable rate are local stablecoins with backing. At the same time, both in terms of capitalization and transaction volume, dominated by centralized fiat-backed and gold-backed stablecoins. Decentralized non-backed stablecoins are not widespread, despite a number of technological innovations that may underlie their stabilization mechanism. The authors have identified main scenarios for the use of local and global stablecoins in the near future. It was observed that at a time of decreased volatility stablecoins are currently predominantly used as a tool to minimize the risk of price volatility in the crypto-assets market. In contrast, the growing interest in applying of global stablecoins under the new reduction volatility mechanisms, may encourage the extensive use of stablecoins in both retail and wholesale payments at the international level. In addition, the development of global stablecoins may entail risks to financial stability and the functioning of monetary systems, to minimize which it is necessary to develop a regulatory framework and financial procedures that take into account the possibility of a wide circulation of stablecoins.

Suggested Citation

  • Kochergin, D. & Ivanova, A., 2022. "Stablecoins: Classification, functional features and development prospects," Journal of the New Economic Association, New Economic Association, vol. 53(1), pages 100-120.
    • Handle: RePEc:nea:journl:y:2022:i:53:p:100-120
    DOI: 10.31737/2221-2264-2022-53-1-5
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    References listed on IDEAS

    as
    1. Bullmann, Dirk & Klemm, Jonas & Pinna, Andrea, 2019. "In search for stability in crypto-assets: are stablecoins the solution?," Occasional Paper Series 230, European Central Bank.
    2. Morten Linnemann Bech & Rodney Garratt, 2017. "Central bank cryptocurrencies," BIS Quarterly Review, Bank for International Settlements, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    stablecoins; crypto-assets; virtual currency; distributed ledger technology; collateral stablecoins; algorithmic stablecoins; local stablecoins; global stablecoins;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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