Stanford Prof Darrell Duffie on Our Big Stablecoin Future

In October, at a distinguished Group of Thirty event, Duffie gave a presentation alongside Libra co-creator David Marcus and Bank for International Settlements general manager Agustin Carstens on the impact of stablecoins on banking systems.

I emailed Professor Duffie a lot of questions about stablecoins over a period of several weeks.

A stablecoin is a digital asset whose price is constant or nearly constant in terms of the native fiat currency, that is held and transferred cryptographically.

What do you make of crypto-pegged stablecoins like DAI?I am open minded, but I expect that crypto-pegged stablecoins will have a tough time establishing a critical mass of users for payments applications.

What would JPMorgan's stablecoin likely achieve for inter and intra-bank processes?

What do you think of the USD-backed stablecoin proposed by former CFTC executives Gorfine and Giancarlo?

It could simply begin to substitute legacy forms of central bank money with its own stablecoin.

The central bank could also allow banks and potentially other intermediaries to supply its stablecoin to anyone who wants it.

I doubt the Fed, or the U.S. more generally, will introduce a state-backed stablecoin.

If a foreign or global stablecoin became widely used in a small open economy, the control of local-currency monetary policy would become more difficult.