Stablecoins are emerging as the U.S. administration’s answer to defending the dollar’s global role. Rather than pursue a central bank digital currency (CBDC), Washington appears to be opting for a private-sector solution that could reshape the landscape for cross-border payments, Deutsche Bank says.
The dollar’s dominance rests on two pillars: the world’s willingness to save in dollars, which provides what economists call “exorbitant privilege,” and the dollar’s use in cross-border payments, which grants geoeconomic leverage.
These are tightly linked, with corporate preferences for invoicing and saving reinforcing the system.
But the foundations have begun to shift. The dollar’s share of central bank reserves has been slipping, and payments competition is intensifying amid new technologies, rival systems, and gaps in underserved markets.
“Stablecoins appear to be the U.S.’ answer to defending the dollar’s position in global payments, opting for a private-sector solution over CBDCs,” Deutsche Bank wrote.
Corporate adoption remains limited and doubts over their monetary qualities persist, but regulatory blessing, incumbent FX dominance, and a first-mover advantage strengthen the dollar’s case.
The implications stretch across other major blocs. For Europe, dollar stablecoins pose a threat to efforts to expand euro use in global invoicing and payments. To hedge against this, Deutsche Bank argues Europe should push forward with an ecosystem of bank and corporate-issued euro stablecoins.
The region has advantages over China in this respect, including a higher share of trade invoicing in euros, open capital markets, and stronger institutional trust.
