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Stablecoins, money market funds and monetary policy

Author

Listed:
  • Aldasoro, Inaki
  • Cornelli, Giulio
  • Ferrari Minesso, Massimo
  • Gambacorta, Leonardo
  • Habib, Maurizio Michael

Abstract

Using a new series of crypto shocks, we document that money market funds’ (MMF) assets under management, and traditional financial market variables more broadly, do not react to crypto shocks, whereas stablecoin market capitalization does. U.S. monetary policy shocks, in contrast, drive developments in both crypto and traditional markets. Crucially, the reaction of MMF assets and stablecoin market capitalization to monetary policy shocks is different: while prime-MMF assets rise after a monetary policy tightening, stablecoin market capitalization declines. In assessing the state of the stablecoin market, the risk-taking environment as dictated by monetary policy is much more consequential than flight-to-quality dynamics observed within stablecoins and MMFs.

Suggested Citation

  • Aldasoro, Inaki & Cornelli, Giulio & Ferrari Minesso, Massimo & Gambacorta, Leonardo & Habib, Maurizio Michael, 2024. "Stablecoins, money market funds and monetary policy," CEPR Discussion Papers 19605, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:19605
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    2. Castrén, Olli & Russo, Riccardo, 2026. "Runs, transparency and regulation: On the optimal design of stablecoin frameworks," Economics Letters, Elsevier, vol. 258(C).
    3. Iñaki Aldasoro & Matteo Aquilina & Ulf Lewrick & Sang Hyuk Lim, 2025. "Stablecoin growth - policy challenges and approaches," BIS Bulletins 108, Bank for International Settlements.
    4. Ferrari Minesso, Massimo & Siena, Daniele, 2026. "Private money and public debt. U.S. Stablecoins and the global safe asset channel," Working Paper Series 3174, European Central Bank.
    5. Fukker, Gábor & Sydow, Matthias & Mimun, Anisa Tiza, 2025. "The effects of monetary policy on banks and non-banks in times of stress," Working Paper Series 3114, European Central Bank.
    6. Vanhoudt Patrick, 2026. "Anchoring Europe’s Monetary Future: Why a Wholesale Digital Euro Is the Immediate Priority," Intereconomics: Review of European Economic Policy, Sciendo, vol. 61(2), pages 73-80.
    7. 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).
    8. Barthélemy, Jean & Gardin, Paul & Nguyen, Benoit, 2026. "Stablecoins and short-term funding markets," Journal of International Money and Finance, Elsevier, vol. 161(C).
    9. Samuel Kaplan & Efstathios Polyzos & David Tercero-Lucas, 2025. "Crypto Listens: Asymmetric Reactions to Text-based Signals in Central Bank Communications," Working Papers 365, Red Nacional de Investigadores en Economía (RedNIE).
    10. Bindseil, Ulrich, 2026. "Regulatory responses to the financial stability implications of stablecoins," SAFE Working Paper Series 470, Leibniz Institute for Financial Research SAFE.
    11. Rashad Ahmed & Iñaki Aldasoro, 2025. "Stablecoins and safe asset prices," BIS Working Papers 1270, Bank for International Settlements.

    More about this item

    Keywords

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    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F30 - International Economics - - International Finance - - - General

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