Ethereum Updates Today: Surge in Stablecoins Fuels Discussion: Expansion or Threat to International Financial Stability

Stephen Miran of the U.S. Federal Reserve has described stablecoins as a transformative element in the global financial landscape, especially in developing economies where they could surpass conventional banks and fuel economic expansion. At a recent conference, Miran emphasized the growing use of dollar-pegged stablecoins for international payments and capital movement,

by boosting demand for U.S. Treasuries. His comments reflect a wider shift in the financial sector, with leading institutions and regulators increasingly acknowledging stablecoins’ potential to enhance financial access and streamline operations.

JPMorgan and DBS, two major global banks, are currently building a blockchain-powered tokenization system to streamline interbank payments. This project seeks to establish a unified approach for tokenized deposits,

across both public and private blockchains. This development highlights a broader institutional trend toward utilizing blockchain technology for more efficient and affordable money transfers, with stablecoins acting as a link between traditional finance and decentralized finance (DeFi) platforms.

Meanwhile, the value of tokenized assets on Ethereum has soared to $201 billion, accounting for almost two-thirds of the worldwide market. Stablecoins, which make up the majority of Ethereum’s transaction activity, for DeFi applications, cross-border payments, and liquidity pools. The platform’s tokenized fund assets under management (AUM) have surged by 2,000% since the start of 2024, fueled by institutional players like BlackRock and Fidelity. This rapid growth has led some analysts to believe Ethereum’s value is underestimated, with expectations of higher ETH prices as adoption continues to rise.

Yet, the ascent of stablecoins is not without obstacles.

her long-term forecast downward from $2.4 million to $900,000, attributing the adjustment to stablecoins’ disruptive impact in developing economies. She pointed out that stablecoins are being adopted faster than Bitcoin, especially in high-inflation countries like Venezuela, where Tether’s USDT is widely used as a savings tool. Standard Chartered projects that dollar-linked stablecoins could divert over $1 trillion from traditional banks in emerging markets by 2028, intensifying the competitive landscape.

Miran’s positive outlook stands in contrast to more cautious perspectives that highlight possible risks.

that an aggressive U.S. push to lead the stablecoin sector could have unintended effects, such as a "global stablecoin glut" that disrupts monetary policy. An oversupply of stablecoins might compel the Federal Reserve to cut interest rates more than inflation data would warrant, potentially causing unforeseen issues.

Major financial institutions are also responding to the stablecoin surge. Bank of New York (BNY)

, aimed at managing reserves for stablecoin issuers and reinforcing its leadership in digital assets. Modeled after traditional money market funds, this initiative highlights BNY’s commitment to stablecoins as a foundational element of the digital financial system.

As the stablecoin sector continues to develop, both regulators and institutions must strike a balance between leveraging the technology’s advantages and managing its risks. With emerging economies leading the way in adoption and U.S. policymakers facing the prospect of a "global savings glut," the next few years will reveal whether stablecoins fulfill their promise or introduce new economic challenges.

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