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Public information and stablecoin runs

Author

Listed:
  • Rashad Ahmed
  • Iñaki Aldasoro
  • Chanelle Duley

Abstract

We show that the informational quality of stablecoin (SC) issuers' reserve assets affects the type of coordination game being played among SC holders and its equilibria. When the volatility of reserve assets is unknown, par convertibility is resilient to small shocks but fails with large negative public shocks to reserve asset values, even if they are initially high. Public information disclosure increases (reduces) run risk for sufficiently low (high) holders' priors about reserve quality. Transparency and quality of reserve assets have distinct effects on issuer failure risk. Our results point to a trade-off between peg stability and issuer fragility.

Suggested Citation

  • Rashad Ahmed & Iñaki Aldasoro & Chanelle Duley, 2024. "Public information and stablecoin runs," BIS Working Papers 1164, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1164
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Castrén, Olli & Russo, Riccardo, 2026. "Runs, transparency and regulation: On the optimal design of stablecoin frameworks," Economics Letters, Elsevier, vol. 258(C).
    2. Matteo Aquilina & Giulio Cornelli & Jon Frost & Leonardo Gambacorta, 2025. "Cryptocurrencies and decentralised finance: functions and financial stability implications," BIS Papers, Bank for International Settlements, number 156.
    3. Walter Hernandez Cruz & Jiahua Xu & Paolo Tasca & Carlo Campajola, 2024. "No Questions Asked: Effects of Transparency on Stablecoin Liquidity During the Collapse of Silicon Valley Bank," Papers 2407.11716, arXiv.org.
    4. John E. Marthinsen & Steven R. Gordon, 2024. "Synthetic Central Bank Digital Currencies and Systemic Liquidity Risks," IJFS, MDPI, vol. 12(1), pages 1-17, February.
    5. Aldasoro, Iñaki & Cornelli, Giulio & Ferrari Minesso, Massimo & Gambacorta, Leonardo & Habib, Maurizio Michael, 2025. "Stablecoins, money market funds and monetary policy," Economics Letters, Elsevier, vol. 247(C).
    6. Brian Zhu, 2024. "Information Structures in Stablecoin Markets," Papers 2408.07227, arXiv.org, revised Mar 2026.
    7. Dionysopoulos, Lambis & Urquhart, Andrew, 2024. "10 years of stablecoins: Their impact, what we know, and future research directions," Economics Letters, Elsevier, vol. 244(C).

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    More about this item

    Keywords

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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • G01 - Financial Economics - - General - - - Financial Crises
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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