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  5. Digital Assets and the Exorbitant Dollar Privilege

AEA Papers and Proceedings

ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)

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Digital Assets and the Exorbitant Dollar Privilege

  • Marina Azzimonti
  • Vincenzo Quadrini
AEA Papers and Proceedings
vol. 114, May 2024
(pp. 153–56)
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Abstract

This paper analyzes how the rise of digital assets, particularly stablecoins, affects the US dollar's dominance in global financial markets. It discusses whether stablecoins, backed by US debt or other assets such as cryptocurrencies, could replace traditional US safe assets. On the one hand, stablecoins could increase the demand for dollar reserves, strengthening the international role of the dollar. On the other hand, if stablecoins are backed by nondollar reserves, the global demand for dollars may decline, potentially reducing its international role.

Citation

Azzimonti, Marina, and Vincenzo Quadrini. 2024. "Digital Assets and the Exorbitant Dollar Privilege." AEA Papers and Proceedings, 114: 153–56. DOI: 10.1257/pandp.20241069

Additional Materials

JEL Classification

  • E41 Demand for Money
  • E42 Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
  • F30 International Finance: General
  • G15 International Financial Markets