European Central Bank: Stablecoins are not a "safe haven" for US monetary policy

ChainCatcher news, the European Central Bank (ECB) has questioned the view that stablecoins are a "safe haven" for investors during market turmoil, finding that they are actually highly influenced by U.S. monetary policy.

The working paper examines the connections between U.S. monetary policy, money market funds (MMFs), and stablecoins. It argues that monetary policy, especially dollar policy, is key to linking cryptocurrencies and traditional financial markets. Stablecoins, which have a fixed price typically pegged to fiat currencies (usually the dollar), are susceptible to shocks from within the traditional financial markets, such as changes in U.S. monetary policy, like interest rate hikes.