TY  - UNPD
A1  - Buggenum, Hugo van
A1  - Gersbach, Hans
A1  - Zelzner, Sebastian
T1  - Contagious stablecoins?
N2  - Can competing stablecoins produce efficient and stable outcomes? We study competition among stablecoins pegged to a stable currency. They are backed by interest-bearing safe assets and can be redeemed with the issuer or traded in a secondary market. If an issuer sticks to an appropriate investment and redemption rule, its stablecoin is invulnerable to runs. Since an issuer must pay interest on its stablecoin if other issuers also pay interest, competing interest-bearing stablecoins, however, are contagious and can render the economy inefficient and unstable. The efficient allocation is uniquely implemented when regulation prevents interest payments on stablecoins.
T3  - CFS working paper series - No. 717 
KW  - Stablecoins
KW  - currency competition
KW  - free banking
KW  - private money
KW  - digital money
Y1  - 2023
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/72294
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-722945
UR  - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4746634
PB  - Center for Financial Studies
CY  - Frankfurt, M.
ER  -