Fed paper explores stablecoins’ impact on financial system

Draft Fed TLAC rules unclear on structured notes

New research published by the Federal Reserve explores how different structures underpinning stablecoins can impact the financial sector and the wider economy.

Authors Gordon Liao and John Caramichael find a “two-tier” structure, where stablecoins are backed by commercial bank reserves, can both support stablecoin issuance and maintain credit intermediation.

A more radical design, a “narrow-bank” structure, where stablecoins are fully backed by central bank reserves, could be more stable but

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