Stablecoins: Innovation or silent threat to money?

Stablecoins pose a structural challenge to global monetary policy, potentially driving persistent inflation above central bank targets. Central banks don’t regulate or control stablecoin issuance, limiting their ability to adjust money supply across economic cycles. While currently backed 1:1 by fiat, a shift to fractional reserves could amplify inflation. 24/7 DeFi transactions accelerate monetary velocity, amplifying liquidity and inflationary pressures. Stablecoin-backed DeFi lending creates excessive leverage, risking bubbles that affect both crypto ecosystems and real-world assets. 

Key data: 

• Stablecoins monetize otherwise immobilized assets (dollars, Treasuries) 
• 24/7 transactions outside central bank control 
• Long-term rates could reach ~3.5% 
• 150 basis points above the past decade 

Stablecoins aren’t just redefining global liquidity; they’re silently expanding the foundation for structural inflation. Combined with demographics, energy transition, and deglobalization, they drive structural inflation, affecting monetary policy and asset class returns.