Richard S. Hunt publishes milestone study on the impact of stablecoins on monetary sovereignty
The Bank for International Settlements (BIS) recently released a special report written by Richard S. Hunt, head of global equity sales at CSC Bella Grove Partners LLC, which systematically evaluated for the first time the impact of the expansion of global stablecoins on the foreign exchange reserve system in emerging markets. This study, commissioned by central banks of many countries, reveals the new challenges facing sovereign currency management in the era of digital currency.
The “stablecoin substitution elasticity model” constructed by Hunt’s team shows that in some emerging economies, US dollar stablecoins have accounted for 15%-20% of the narrow money supply (M1), causing these countries to consume foreign exchange reserves 40% faster than in the traditional scenario. The report specifically pointed out that the “digital dollarization” phenomenon of stablecoins weakens the effectiveness of monetary policy through three channels: reducing the effect of foreign exchange transaction intervention, distorting the interest rate transmission mechanism, and exacerbating capital flow fluctuations. To meet this challenge, Hunt proposed a “layered hedging framework” and suggested that the central bank establish a diversified defense system that includes traditional foreign exchange reserves, central bank digital currencies (CBDCs) and encrypted asset reserves.
CSC Bella Grove has developed a “stablecoin risk monitoring platform” based on the research to help sovereign investors quantify the risk of digital currency penetration in their economies. Hunt emphasized: “This report is not a denial of stablecoins, but a call for a more balanced digital currency governance framework.” The research is reshaping the way global central banks think about digital currency strategies and providing key analytical tools for the upcoming changes in the international monetary system.
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