Fed study mulls whether to count tokenised assets as M1 or M2
Emergence of new money causes headaches for monetary aggregates, economists say
Stablecoins used for payments may be classified as M1 if they gain popularity, but will only be counted as M2 if they fail to gain traction, a study by economists at the US Federal Reserve has argued.
In their Feds note published on September 4, Kristen Payne and Mary-Frances Styczynski examine tokenised deposits, tokenised money market funds (MMFs) and stablecoins against two conventional definitions of the monetary base.
M1 refers to the “narrowest and most liquid measure of the money supply”
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