Analysis of the Possible Demand of Stablecoins

Research Article
Open access

Analysis of the Possible Demand of Stablecoins

Hantian Zhang 1*
  • 1 Duke Kunshan University, Suzhou(Kunshan), Jiangsu Province, China, 215300    
  • *corresponding author hantian.zhang@dukekunshan.edu.cn
Published on 24 April 2023 | https://doi.org/10.54254/2754-1169/5/20220105
AEMPS Vol.5
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-21-8
ISBN (Online): 978-1-915371-22-5

Abstract

Stablecoins, which are anchored by certain assets, have been gaining market attention in recent years as a branch of cryptocurrencies. The dollar domination in currency markets exists in cryptocurrency since some mainstream stablecoins anchor dollar. Looking back to when the Bretton Woods system was established, the dollar was pegged to gold and gradually became the world’s main currency. Dollar-based global stablecoins haven’t been completely developed, and their use on a global scale carries financial risks. This paper discusses the objectives of stablecoins and the differences between vision and reality based on existing literature and research data. In the process of realizing price stability, stablecoins also generate credit risk, and fall into the logical dilemma that “leaving fiat currency” and “achieving price stability” cannot be achieved simultaneously. This paper suggests that the compromise of stablecoin to centralization can solve part of current problems. Nevertheless, decentralization needs to be studied continuously in order to achieve stablecoin’s objectives.

Keywords:

Stablecoin, Cryptocurrency, Digital Currency, Blockchain, Global Monetary System

Zhang,H. (2023). Analysis of the Possible Demand of Stablecoins. Advances in Economics, Management and Political Sciences,5,379-384.
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References

[1]. Goldberg, L. S. Is the international role of the dollar changing? Current Issues in Economics and Finance, 16(1). (2010).

[2]. Lipton, A., Sardon, A., Schär, F., & Schüpbach, C. From Tether to Libra: Stablecoins, Digital Currency and the Future of Money. ArXiv:2005.12949. https://arxiv.org/abs/2005.12949 (2020).

[3]. Dooley, M. P., Folkerts-Landau, D., & Garber, P. The revived Bretton Woods system. International Journal of Finance & Economics, 9(4), 307–313. https://doi.org/10.1002/ijfe.250 (2004).

[4]. Clark, J., Demirag, D., & Moosavi, S. Demystifying Stablecoins. Queue, 18(1), 39–60. https://doi.org/10.1145/3387945.3388781 (2020).

[5]. Sidorenko, E. L. Stablecoin as a new financial instrument. In International Scientific Conference “Digital Transformation of the Economy: Challenges, Trends, New Opportunities” (pp. 630-638). Springer, Cham. (2019, April).

[6]. Mita, M., Ito, K., Ohsawa, S., & Tanaka, H. What is stablecoin?: A survey on price stabilization mechanisms for decentralized payment systems. In 2019 8th International Congress on Advanced Applied Informatics (IIAI-AAI) (pp. 60-66). IEEE. (2019, July).

[7]. Ante, L., Fiedler, I., & Strehle, E. The impact of transparent money flows: Effects of stablecoin transfers on the returns and trading volume of Bitcoin. Technological Forecasting and Social Change, 170, 120851. https://doi.org/10.1016/j.techfore.2021.120851 (2021).

[8]. Bolt, W., Lubbersen, V., & Wierts, P. Getting the Balance Right: Crypto, Stablecoin and CBDC. Papers.ssrn.com. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4014319 (2022, January 21).

[9]. Brühl, V. Libra — A Differentiated View on Facebook’s Virtual Currency Project. Intereconomics, 55(1), 54–61. https://doi.org/10.1007/s10272-020-0869-1 (2020).

[10]. Zhen Li, Yingge Liu & Yicheng Dai. The impact of Libra stablecoin on China’s monetary policy and its countermeasures. Journal of Xi 'an Jiaotong University (Social Sciences) (03), 55-63. doi:10.15896/j.xjtuskxb.202003007. (2020).

[11]. Www.bis.org. OTC foreign exchange turnover in April 2022. https://www.bis.org/statistics/rpfx22_fx.htm (2022)

Cite this article

Zhang,H. (2023). Analysis of the Possible Demand of Stablecoins. Advances in Economics, Management and Political Sciences,5,379-384.

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The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 2022 International Conference on Financial Technology and Business Analysis (ICFTBA 2022), Part 1

ISBN：978-1-915371-21-8(Print) / 978-1-915371-22-5(Online)
Editor：Javier Cifuentes-Faura, Canh Thien Dang
Conference website: http://www.icftba.org
Conference date: 16 December 2022
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.5
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Goldberg, L. S. Is the international role of the dollar changing? Current Issues in Economics and Finance, 16(1). (2010).

[2]. Lipton, A., Sardon, A., Schär, F., & Schüpbach, C. From Tether to Libra: Stablecoins, Digital Currency and the Future of Money. ArXiv:2005.12949. https://arxiv.org/abs/2005.12949 (2020).

[3]. Dooley, M. P., Folkerts-Landau, D., & Garber, P. The revived Bretton Woods system. International Journal of Finance & Economics, 9(4), 307–313. https://doi.org/10.1002/ijfe.250 (2004).

[4]. Clark, J., Demirag, D., & Moosavi, S. Demystifying Stablecoins. Queue, 18(1), 39–60. https://doi.org/10.1145/3387945.3388781 (2020).

[5]. Sidorenko, E. L. Stablecoin as a new financial instrument. In International Scientific Conference “Digital Transformation of the Economy: Challenges, Trends, New Opportunities” (pp. 630-638). Springer, Cham. (2019, April).

[6]. Mita, M., Ito, K., Ohsawa, S., & Tanaka, H. What is stablecoin?: A survey on price stabilization mechanisms for decentralized payment systems. In 2019 8th International Congress on Advanced Applied Informatics (IIAI-AAI) (pp. 60-66). IEEE. (2019, July).

[7]. Ante, L., Fiedler, I., & Strehle, E. The impact of transparent money flows: Effects of stablecoin transfers on the returns and trading volume of Bitcoin. Technological Forecasting and Social Change, 170, 120851. https://doi.org/10.1016/j.techfore.2021.120851 (2021).

[8]. Bolt, W., Lubbersen, V., & Wierts, P. Getting the Balance Right: Crypto, Stablecoin and CBDC. Papers.ssrn.com. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4014319 (2022, January 21).

[9]. Brühl, V. Libra — A Differentiated View on Facebook’s Virtual Currency Project. Intereconomics, 55(1), 54–61. https://doi.org/10.1007/s10272-020-0869-1 (2020).

[10]. Zhen Li, Yingge Liu & Yicheng Dai. The impact of Libra stablecoin on China’s monetary policy and its countermeasures. Journal of Xi 'an Jiaotong University (Social Sciences) (03), 55-63. doi:10.15896/j.xjtuskxb.202003007. (2020).

[11]. Www.bis.org. OTC foreign exchange turnover in April 2022. https://www.bis.org/statistics/rpfx22_fx.htm (2022)

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