IDEAS home Printed from https://ideas.repec.org/p/ecb/ecbwps/20253111.html
   My bibliography  Save this paper

Central bank money as a catalyst for fungibility: the case of stablecoins

Author

Listed:
  • Coste, Charles-Enguerrand
  • Pantelopoulos, George

Abstract

To ensure that means of payments are readily interchangeable at face value – i.e. fungible – for retail payments, three elements are required: (1) settlement finality; (2) interoperability; and (3) seamless convertibility of the means of payment into the “ultimate” or quasi-ultimate means of payment. This paper argues that stablecoins issued by different issuers on different blockchains can be fungible to the same extent as commercial bank deposits from different banks provided that (i) payment and settlement technologies are interoperable, (ii) payments are transacted on ledgers that offer settlement finality, and (iii) that central bank money acts as the anchor to the monetary system (assuming that the central bank money is itself underscored by a homogenous unit of account). On this basis, this paper asserts that tokenised funds and off-chain collateralised stablecoins are fungible means of payments under some conditions, and that on-chain collateralised stablecoins can be prima facie classified as fungible means of payments, so long as the identical preconditions associated with accomplishing means of payment fungibility for tokenised funds/off-chain collateralised stablecoins can be fulfilled, and on the premise that the on-chain collateral can be readily converted into higher level money. Finally, it is determined that algorithmic stablecoins are not fungible means of payments. JEL Classification: B26, E42

Suggested Citation

  • Coste, Charles-Enguerrand & Pantelopoulos, George, 2025. "Central bank money as a catalyst for fungibility: the case of stablecoins," Working Paper Series 3111, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20253111
    as

    Download full text from publisher

    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp3111~db48fc6139.en.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

    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:ecb:ecbwps:20253111. 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: Official Publications (email available below). General contact details of provider: https://edirc.repec.org/data/emieude.html .

    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.