Can stablecoins save the US dollar?

non-collateralized stablecoin

According to lawyer and corporate economist Brian P. Brook and Charles W. Calomiris, journalists at The Wall Street Journal, stablecoins are set to be the core of keeping the dollar at the helm of global economics.

In the piece by Brooks and Calomiris, the authors note the importance of a sound and stable legal framework, encouraging Congress to consider setting regulatory infrastructure in place. Brooks, the former CEO of Binance.US, served both in the cryptocurrency industry and in the US department as the Comptroller of the Currency. Calomiris, a well-known financial expert, is the dean of economics at the University of Austin. He also served in the Office of the Comptroller of the Currency as the chief economist.

Before this piece was released, the Clarity for Payment Stablecoins Act was proposed by House Financial Services Committee Chairman Patrick McHenry. The Act was drafted and proposed, but has seen no motion since July, leading to the urge to move forward by Brooks and Calomiris. McHenry used their article as a reminder of the Act and the lack of movement in publishing and implementing the legal framework.

According to the authors, the dollar is currently at risk of holding its global reserve currency. To avoid this dedollarisation, the two suggest the nation look to stablecoins to maintain the dollar’s strength in the global economy. The concern is supported by data that comes the International Monetary Fund, which shows that US dollar reserves held in foreign banks has declined by 14% since 2020. If nothing is put in the place, the dollar risks losing more ground in global reserves. According to Brooks and Calomiris, any tool should be considered if it helps boost the US dollar. The two noted:

“If stablecoins flourish, citizens of other countries will increase the demand for dollars independent of (and perhaps contrary to) their governments’ political decisions… U.S. politicians need to agree that re-dollarizing the global economy is important.”

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