We’re of two minds about stablecoins: on the one hand, they function for some like a trusted currency and the top five have a market capitalization around $160 billion. On the other, the underlying holdings look more like a riskier money fund than anything we’d call stable – we would not prefer our currency backed by loans to Chinese companies. But for securities finance, these products offer important learning opportunities for the real deal, a future introduction of central bank digital currencies (CBDCs).
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