Abstract This paper examines the transformation of the monetary system since the end of Bretton Woods, highlighting Bitcoin and stablecoins as alternative responses to the limitations of fiat-credit money. Bitcoin introduces decentralised digital scarcity, while stablecoins combine blockchain technology with fiat-backed stability. The paper analyses their economic roles, business models, and strategic implications, particularly for the United States, where stablecoins may reinforce dollar dominance through increased demand for Treasury securities. It also contrasts Europe’s more cautious approach and considers the implications for financial stability, arguing that digital money reintroduces constraints on money creation while creating new systemic risks.
Thomas Mayer (Thu,) studied this question.