Gorton, Gary B. <br/><br/>
Leverage and Stablecoin Pegs / 
Gary B. Gorton, Elizabeth C. Klee, Chase P. Ross, Sharon Y. Ross, Alexandros P. Vardoulakis. 
 - Cambridge, Mass.  National Bureau of Economic Research  2022. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w30796 .
 - Working Paper Series (National Bureau of Economic Research)  no. w30796. .
<br/><br/> December 2022. 
<br/><br/> Money is debt that circulates with no questions asked. Stablecoins are a new form of private money that circulate with many questions asked. We show how stablecoins can maintain a constant price even though they face run risk and pay no interest. Stablecoin holders are indirectly compensated for stablecoin run risk because they can lend the coins to levered traders. Levered traders are willing to pay a premium to borrow stablecoins when speculative demand is strong. Therefore, the stablecoin can support a $1 peg even with higher levels of run risk. 
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<br/><br/><br/>System requirements: Adobe [Acrobat] Reader required for PDF files. <br/>Mode of access: World Wide Web. 
<br/><br/><label>Subjects--Topical Terms: </label><br/>General<br/>General Financial Markets<br/>General