Summary:
The dominance of the US dollar as the global reserve currency is decreasing, which poses a risk to stablecoin users that are pegged to the US dollar. De-dollarization is actively being pursued by countries like Russia and China, which could lead to the US dollar losing its hegemony. However, stablecoin issuers are innovating and experimenting with new solutions to cater to this scenario.
Key points:
– The US dollar now accounts for just over 58% of global foreign exchange reserves, a decrease from the 71% share it had in 2001.
– De-dollarization refers to the process of reducing the use of the US dollar in a country’s economy, and countries like Russia and China are actively pursuing it.
– Stablecoins with a market cap exceeding $1 billion are currently pegged to the US dollar, but stablecoin issuers are innovating and experimenting with new solutions.
– Stablecoins are particularly beneficial for citizens in emerging markets who may face high levels of inflation and currency instability.
– As long as stablecoins have sufficient collateral, their users should not be worried that a transition away from US pegged stablecoins will cause any liquidity issues.
