Stablecoins

The IMF has published a thorough report on Stablecoins where tries to explain not only how they work, but what are the use cases. This report is timely, because the Trump administration needs another buyer of last resort for the long term treasury bonds they will need to issue to finance the deficit, and rollover the debt that’s maturing, trying to extend durations along the way. As you can see see on the upper chart below, they have a big percentage of their assets invested in Treasuries, and as they grow in assets, the gross amount of US debt will grow as well. The Trump administration is helping by eliminating the regulatory burden so they can grow faster, and as you can see in the lower part of the chart, Stablecoins are still a very low percentage of all crypto (around 1%). It should not be surprising if banks and pension plans are allowed to invest in these assets. The investable assets tool box now has another dimensions for investors to implement their asset allocation.

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