How stablecoins become money: Liquidity, sovereignty, and credit

Stablecoins can realize their potential only if they function as a unified part of the monetary system, with all money interchangeable at par. Current stablecoins fall short: a $5M conversion on an automated market maker would return less than $5M because of slippage, and direct redemption is largely limited to institutional or verified users, such as Tether's threshold of about $100,000. Widespread dollar stablecoin use could weaken local policymakers' control over interest rates and exchange rates, and the proposed remedies include clearinghouses, neutral collateral layers, and local-currency stablecoins.