IDEAS home Printed from https://ideas.repec.org/a/rsk/journ7/7963910.html

Eclipsing the pyramid: stablecoins and settlement

Author

Listed:
  • Clément Berthou
  • Xavier Lavayssière

Abstract

A “settlement eclipse†occurs when the settlement function of a layer of the monetary pyramid is occulted by the layer beneath it. It arises when a financial institution or a payment and settlement system internalizes transfers at sufficient scale. This paper formalizes this concept, discusses its consequences and applies it to stablecoins. The capacity of stablecoins to circulate globally without redemption has an “eclipsing†potential. This property results from the combination of three features: a bearer claim; a digital platform enabling peer-to-peer transfers; and a secondary market ecosystem. These features make stablecoins simultaneously more operationally autonomous from the traditional monetary pyramid and more structurally concentrated. The paper also examines policy options and the potential emergence of a tokenized monetary pyramid. Whether that pyramid acquires a direct public anchor or remains structurally subordinate to the traditional one is an institutional and political choice rather than a technological one, with direct consequences for financial stability, monetary policy transmission and the distribution of systemic risk.

Suggested Citation

  • Clément Berthou & Xavier Lavayssière, . "Eclipsing the pyramid: stablecoins and settlement," Journal of Financial Market Infrastructures, Journal of Financial Market Infrastructures.
    • Handle: RePEc:rsk:journ7:7963910
    as

    Download full text from publisher

    File URL: https://www.risk.net/node/7963910
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rsk:journ7:7963910. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Paine (email available below). General contact details of provider: https://www.risk.net/journal-of-financial-market-infrastructures .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.