Money For the Rest of Us Stablecoins and CBDCs: Their Rise, Risks and Possibilities
Jun 11, 2025
The podcast dives into the explosive growth of stablecoins, spotlighting Circle Invest's remarkable IPO success. It contrasts public and private money, emphasizing the emerging role of CBDCs and the risks involved. Listeners learn about the unique mechanics of synthetic vs. true stablecoins and how recent financial crises, like the Silicon Valley Bank collapse, have influenced their stability. Discussions also cover the implications of introducing CBDCs, including privacy concerns and their potential to boost financial inclusion.
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Stablecoins Enable Fast Settlements
- Stablecoins like USDC and Tether offer near-instant global transaction settlement on blockchains such as Ethereum.
- This speed advantage contrasts with traditional banking wire transfers which take hours to settle.
True Stablecoins Backed by Collateral
- True stablecoins like USDC and Tether are backed by collateral such as treasury bills, not on-chain assets.
- This collateral provides price stability but exposes stablecoins to risks similar to money market funds.
Algorithmic Stablecoins Use Crypto Collateral
- Algorithmic stablecoins rely on over-collateralized crypto assets and algorithms to maintain their peg.
- Some like DAI have shown relative stability despite the volatility risk of crypto backing.