Financial Stability Board · 2023 · Report · Financial Stability Board
The FSB's finalised international recommendations for regulating global stablecoin arrangements.
Key findings
- Sets 'same activity, same risk, same regulation' as the guiding principle for stablecoins.
- Requires robust governance, redemption rights, and reserve/stabilisation safeguards for GSCs.
European Parliament and Council of the European Union · 2023 · Policy / legal text · Official Journal of the European Union
The EU's comprehensive crypto-asset framework; regulates stablecoins as e-money tokens (EMTs) and asset-referenced tokens (ARTs).
Key findings
- Classifies fiat-pegged stablecoins as e-money tokens (EMTs) and multi-asset/other pegs as asset-referenced tokens (ARTs).
- Requires issuer authorisation, adequately backed reserves, and redemption at par for holders.
- Imposes usage/transaction caps on large non-euro tokens used widely as a means of exchange.
Bank of England · 2023 · Report · Bank of England Discussion Paper
The Bank of England's proposed regime for stablecoins used at systemic scale in UK payments.
Key findings
- Systemic payment stablecoins should be backed by deposits at the central bank (or equivalent high-quality assets).
- Proposes holding limits during a transition to manage financial-stability risks.
CPMI, IOSCO · 2022 · Report · CPMI-IOSCO (BIS)
Confirms that systemically important stablecoin arrangements must meet the international standards for payment systems.
Key findings
- Systemic stablecoin arrangements are expected to observe the Principles for Financial Market Infrastructures.
- Emphasises settlement finality, governance and comprehensive risk management.
Antonio Díaz, Carlos Esparcia, Diego Huélamo · 2022 · Journal article · The North American Journal of Economics and Finance
This paper empirically assessed the ability of three stablecoins to mitigate the downside risk of a traditional cryptocurrency portfolio. The findings indicated that dollar-backed stablecoins are particularly suitable as a hedge for crypto investors.
Key findings
- Dollar-backed stablecoins have low conditional correlations with cryptocurrency portfolios.
- All stablecoins considered have high diversification capacities by systematically reducing portfolio tail risk.
European Central Bank · 2022 · Report · ECB Macroprudential Bulletin, Issue 18
ECB assessment of stablecoin functions (trading, settlement, DeFi collateral) and their financial-stability risks.
Key findings
- Largest stablecoins are used mainly for crypto trading, settlement and DeFi rather than real-economy payments.
- Reserve opacity and redemption terms are key risks warranting regulation.
Bank for International Settlements · 2022 · Report · BIS Annual Economic Report 2022, Chapter III
The BIS's vision of a future monetary system, assessing stablecoins and crypto against a central-bank-money core.
Key findings
- Argues stablecoins piggyback on the credibility of central-bank money and can fragment the monetary system.
- Positions CBDCs and tokenised central-bank money as the preferred foundation.
Klaus Grobys, Juha-Pekka Junttila, James W. Kolari, Niranjan Sapkota · 2021 · Journal article · Journal of Empirical Finance
This paper investigates the volatility processes of stablecoins and their relationship with Bitcoin volatility. It finds that Bitcoin volatility influences the volatilities of stablecoins, which are statistically unstable.
Key findings
- Bitcoin volatility is well-behaved in a statistical sense with a finite theoretical variance.
- The volatilities of stablecoins are statistically unstable and respond to Bitcoin volatility.
- Lagged Bitcoin volatility exhibits Granger-causal effects on the volatilities of stablecoins.
Dirk A. Zetzsche, Ross P. Buckley, Douglas W. Arner · 2021 · Journal article · Oxford Journal of Legal Studies
Legal analysis of the regulatory challenges posed by Libra/Diem-style global stablecoins.
Key findings
- A global multi-currency stablecoin raises novel cross-border regulatory-perimeter questions.
- Recommends coordinated, function-based regulation across jurisdictions.
President's Working Group on Financial Markets, FDIC, OCC · 2021 · Policy / legal text · U.S. Department of the Treasury
The landmark US interagency report recommending that payment-stablecoin issuers be regulated as insured depository institutions.
Key findings
- Recommends Congress require payment-stablecoin issuers to be insured depository institutions.
- Identifies run risk, payment-system risk, and systemic risk / concentration of economic power as the principal concerns.
- Set the template for subsequent US stablecoin legislation.
Gary B. Gorton, Jeffery Y. Zhang · 2021 · Working paper · SSRN Working Paper; later University of Chicago Law Review
Argues stablecoins recreate the instability of the 19th-century 'wildcat' free-banking era and proposes regulating issuers like banks or issuing a CBDC.
Key findings
- Privately produced money that does not trade at par 'no-questions-asked' is inherently run-prone, mirroring pre-1863 wildcat banking.
- Recommends either bringing stablecoin issuers under bank-style regulation and insurance, or introducing a central bank digital currency.
- Frames stablecoins as a monetary-stability question, not merely a consumer-protection one.
Douglas Arner, Raphael Auer, Jon Frost · 2020 · Working paper · BIS Working Papers No. 905
A foundational BIS framework classifying stablecoins by design and reserve model and mapping their risks to regulatory options.
Key findings
- Stablecoins span a spectrum from fully reserved tokenised funds to fractional and algorithmic designs, with materially different risk profiles.
- Regulation should follow a 'same risk, same regulation' principle rather than treating all stablecoins alike.
- Global stablecoins raise cross-border, monetary-sovereignty and financial-stability concerns beyond any single jurisdiction.
Dirk Bullmann, Jonas Klemm, Andrea Pinna · 2019 · Working paper · ECB Occasional Paper No. 230
ECB taxonomy of stablecoins by stabilisation mechanism, assessing whether each can deliver price stability.
Key findings
- Classifies stablecoins into tokenised funds, off-chain and on-chain collateralised, and algorithmic types.
- Argues stability depends on the credibility of the stabilisation mechanism and its governance.
G7 Working Group on Stablecoins · 2019 · Report · Committee on Payments and Market Infrastructures (BIS)
The G7 report that put 'global stablecoins' on the international policy agenda after Libra.
Key findings
- Global stablecoins could pose risks to monetary sovereignty, financial stability and fair competition.
- No global stablecoin should launch until legal, regulatory and oversight challenges are addressed.