VoxTalks Economics S9 Ep4: Do stablecoins threaten financial stability?
Jan 16, 2026
Richard Portes, an esteemed economist and founder of the CEPR, dives into the world of multi-issuer stablecoins and their potential risks. He explains how these digital tokens, appealing for their ease of transfer, could threaten financial stability if not properly regulated. Portes reveals the complexities of cross-jurisdiction redemption risks and the implications for European reserves. He discusses the intense lobbying from stablecoin issuers and outlines policy options for regulators, warning that without tighter rules, financial contagion could ensue.
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How Stablecoins Make Huge Profits
- Stablecoins profit by issuing tokens and investing reserves while paying holders little or no interest.
- Richard Portes warns this business model is highly profitable and perceived as safer than native crypto but still risky.
Why People Use Stablecoins
- Users prefer stablecoins because they are easy to move on blockchains and offer pseudonymity.
- Richard Portes highlights likely use for illicit activity and heavy use within the crypto ecosystem.
The Multi‑Issuer Stablecoin Construct
- Multi-issuer stablecoins split issuance across jurisdictions with separate reserve pools.
- Portes points out Circle's two-branch design creates separate US and European reserves despite fungibility claims.