Working paper · 2021

Taming Wildcat Stablecoins

Gary B. Gorton, Jeffery Y. Zhang · SSRN Working Paper; later University of Chicago Law Review · SSRN

⚠ The summary and findings below are the editor's working notes, pending verification against the source.

Argues stablecoins recreate the instability of the 19th-century 'wildcat' free-banking era and proposes regulating issuers like banks or issuing a CBDC.

Read the source ↗ · DOI

Research questionAre privately issued stablecoins a stable form of money, and how should they be regulated?

MethodologyHistorical-institutional analysis (analogy to the US free-banking era)

Constructsprivate money; par acceptance; run risk; regulatory design

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.

Limitations: Analogy-driven and normative; limited empirical estimation.

Topics: Regulation & Policy · Financial Stability & Systemic Risk · Design & Economics

Cite this

Gary B. Gorton, Jeffery Y. Zhang (2021). Taming Wildcat Stablecoins SSRN Working Paper; later University of Chicago Law Review.

BibTeX

@techreport{gorton2021tamingwildcatstablecoins,
  title = {Taming Wildcat Stablecoins},
  author = {Gary B. Gorton and Jeffery Y. Zhang},
  year = {2021},
  institution = {SSRN},
  howpublished = {SSRN Working Paper; later University of Chicago Law Review},
  doi = {10.2139/ssrn.3888752},
  url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3888752},
  note = {Indexed by Stablecoin Beat},
}

Indexed by Stablecoin Beat — we link to and summarise sources; we do not host copyrighted full text, and summaries are our own. · All research · Methodology