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192 - Cryptodollars Are the New Eurodollars with Nic Carter
Bankless
The Emergence of Euro Dollars and Stable Coins
3min Snip
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Stable coins are predominantly tokenized US dollars, with the majority issued by offshore entities like Tether and Circle. Euro dollars originated post-World War II when people sought to conduct dollar transactions outside the US due to concerns of asset freezing for political reasons. Initially created by entities like Russia in French banks, euro dollars lacked dollar collateral backing. The market for euro dollars expanded as banks offered higher interest rates compared to the US. The US, monitoring the euro dollar space, established swap lines with foreign central banks to ensure dollar liquidity backing for the increasing dollar liabilities. This formalized the relationship between the United States economy and euro dollars, recognizing its significance and the need to maintain balance in the market.
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