What Does a Stablecoin-Led Contagion Look Like?

Central bank officials, including those from the Dutch National Bank (DNB) and the Bank for International Settlements (BIS), are warning that the rapid growth of USD-pegged stablecoins poses a systemic risk. They fear a loss of confidence leading to mass redemptions could force a fire sale of U.S. Treasury bonds, similar to the 2008 Lehman Brothers crisis, potentially disrupting global financial markets and monetary policy. Recent events, like trade tariff threats causing crypto market shocks and USDC's depeg after the SVB failure, illustrate this fragility. The DNB notes that Tether and Circle control 80% of the market, increasing concentration risk. Conversely, Coinbase Chief Policy Officer Faryar Shirzad argues that full-reserve backing makes stablecoins safer than traditional banking, as they hold virtually risk-free, liquid government bonds, thereby reinforcing stability.

(Source：CoinDesk)