Disclaimer: This reflects my own perspective. This is me thinking out loud. It does not represent my employer or any other organisation.
Niall Ferguson, in his sweeping history of money The Ascent of Money, makes an important observation
"The evolution of money has been a process of gradual dematerialisation."
From gold coins to paper notes to digital ledger entries. Each step moved money further from a physical thing toward a shared belief. Nowhere is this more relevant today than in the world of fiat currencies, which are themselves moving steadily toward digital form. And stablecoins are at the centre of that shift. But like every step before them, they carry the assumptions of the world they were born into. My argument is simple: stablecoins will not flatten the existing hierarchy of currencies before they first reproduce it. And the road from here to any genuinely multi-currency digital future is a much longer tail than the optimists suggest.
Origins:
A stablecoin is a digital token that lives on a blockchain, but unlike Bitcoin or Ethereum, its value is pegged to something stable. Usually a currency. Usually the US dollar. Focusing on the most dominant ones tells you everything you need to know about where the market has landed. More than 90% of fiat-backed stablecoins are pegged to the US dollar, with Tether's USDT and Circle's USDC together accounting for 93% of the total stablecoin market. That concentration has only deepened with regulatory support — in July 2025, the US passed the GENIUS Act, establishing the first formal federal regulatory framework for stablecoins, which has effectively reinforced dollar-linked stablecoins as the standard. So one USDC, issued by Circle, or one USDT, issued by Tether, is supposed to always be worth one dollar. The issuer holds reserves — cash, treasury bills etc — to back that promise. And it is worth noting: Circle and Tether are private enterprises, not governments or central banks. That distinction matters more than most people realise, and we will come back to it.
Why stablecoins exist at all
Stepping back a little, why did stablecoins come to exist at all? It was not because someone thought "let's make global payments better." It was more immediate than that. Crypto markets were trading around the clock, 24 hours, 7 days a week, and whenever people wanted to take profits or reduce risk, they needed somewhere to park value that wasn't volatile. But moving money in and out of bank accounts is slow. The banking system runs on business hours. The crypto market doesn't. So people needed a stable asset that could move on a crypto network, any time, without going through a bank.
Stablecoins solved that.
But here is the part that is easy to miss. Over time, stablecoins stopped being just a workaround for crypto traders. They became genuinely useful for moving money across borders, faster and more cheaply than traditional bank transfers. Today, a SWIFT transfer between countries can take two to five days and carry fees that make small transfers impractical. A stablecoin transfer takes minutes and costs almost nothing. That is a meaningful improvement for anyone who has ever tried to send money internationally.
This has happened before
This dynamic has precedent in history. A financial instrument created to solve one problem and then becoming infrastructure for something much bigger, has of course happened before. In 17th century Amsterdam, merchants trading across long distances faced a version of the same challenge. Economic historian Jan de Vries, writing about the commercial revolution of early modern Europe, describes how merchants needed instruments that could move faster than coins could physically travel. They created bills of exchange: IOUs between trusted parties that circulated as a kind of proxy money. Not officially issued by any state. But accepted widely enough to do the job.
What is striking about the Amsterdam example is how these bills evolved. They started as a simple workaround for slow settlement between trading partners. But over time, as historian Herman Van der Wee noted in his research on Antwerp and Amsterdam's financial markets, the bills of exchange became the circulatory system of European trade, moving value across cities and countries in ways that the underlying coin-based system never could have managed at that speed or scale.
Stablecoins are following a similar arc. They started as a workaround. They are becoming infrastructure.
Why trust always concentrates
And like those Amsterdam bills of exchange, they reached for the most trusted thing available. The bills clustered around the most accepted currencies of their day. But why did trust concentrate the way it did? Tommaso Contarini, Governor of Verona in 1541, observed in his proposal to the Venetian senate that the Antwerp market succeeded precisely because of an abundance of trust and a scarcity of fraud — so much so that it obviated the need for public records altogether (Lattes, 1869, pp. 122–123). Trust, in other words, was the infrastructure. Everything else followed from it.
That trust eventually found its most durable form in Amsterdam. Herman Van der Wee, in The History of European Banking, describes how the private merchant system that preceded the Bank of Amsterdam already understood this instinctively:
The merchants weren't just solving a convenience problem. They were building a promise — that what you put in is what you get back, undiluted. When the Bank of Amsterdam formalised this, it didn't invent something new. It institutionalised something that trust had already made possible. As Stephen Quinn and William Roberds write in their study of the Bank's rise in the American Economic Review:
The progression matters. Private merchants built trust informally. Institutions codified it. And once codified, it became the unit everyone reached for. Not because it was mandated. Because it was reliable.
And that brings us back to the dollar — and why 90% of stablecoins are pegged to it
Stablecoins went straight to the dollar for the same reason. Not because of a grand design. Because when you need something everyone will accept, you reach for what already works. The dollar was — and remains — that thing.
Even at the beginning, the dollar wasn't just a convenient choice. It was doing most of the work.
The shift:
Why stablecoins exist at all
Stepping back a little, why did stablecoins come to exist at all? It was not because someone thought "let's make global payments better." It was more immediate than that. Crypto markets were trading around the clock, 24 hours, 7 days a week, and whenever people wanted to take profits or reduce risk, they needed somewhere to park value that wasn't volatile. But moving money in and out of bank accounts is slow. The banking system runs on business hours. The crypto market doesn't. So people needed a stable asset that could move on a crypto network, any time, without going through a bank.
Stablecoins solved that.
But here is the part that is easy to miss. Over time, stablecoins stopped being just a workaround for crypto traders. They became genuinely useful for moving money across borders, faster and more cheaply than traditional bank transfers. Today, a SWIFT transfer between countries can take two to five days and carry fees that make small transfers impractical. A stablecoin transfer takes minutes and costs almost nothing. That is a meaningful improvement for anyone who has ever tried to send money internationally.
This has happened before
This dynamic has precedent in history. A financial instrument created to solve one problem and then becoming infrastructure for something much bigger, has of course happened before. In 17th century Amsterdam, merchants trading across long distances faced a version of the same challenge. Economic historian Jan de Vries, writing about the commercial revolution of early modern Europe, describes how merchants needed instruments that could move faster than coins could physically travel. They created bills of exchange: IOUs between trusted parties that circulated as a kind of proxy money. Not officially issued by any state. But accepted widely enough to do the job.
What is striking about the Amsterdam example is how these bills evolved. They started as a simple workaround for slow settlement between trading partners. But over time, as historian Herman Van der Wee noted in his research on Antwerp and Amsterdam's financial markets, the bills of exchange became the circulatory system of European trade, moving value across cities and countries in ways that the underlying coin-based system never could have managed at that speed or scale.
Stablecoins are following a similar arc. They started as a workaround. They are becoming infrastructure.
Why trust always concentrates
And like those Amsterdam bills of exchange, they reached for the most trusted thing available. The bills clustered around the most accepted currencies of their day. But why did trust concentrate the way it did? Tommaso Contarini, Governor of Verona in 1541, observed in his proposal to the Venetian senate that the Antwerp market succeeded precisely because of an abundance of trust and a scarcity of fraud — so much so that it obviated the need for public records altogether (Lattes, 1869, pp. 122–123). Trust, in other words, was the infrastructure. Everything else followed from it.
That trust eventually found its most durable form in Amsterdam. Herman Van der Wee, in The History of European Banking, describes how the private merchant system that preceded the Bank of Amsterdam already understood this instinctively:
"...the foundation of the deposit bank in Amsterdam had been preceded by private initiatives of merchants who deposited full-bodied coins... Lenders were protected from repayment in debased coin, for the bankers undertook to pay back the deposits in the same high-quality coins as they had received."
The merchants weren't just solving a convenience problem. They were building a promise — that what you put in is what you get back, undiluted. When the Bank of Amsterdam formalised this, it didn't invent something new. It institutionalised something that trust had already made possible. As Stephen Quinn and William Roberds write in their study of the Bank's rise in the American Economic Review:
"The Bank [of Amsterdam] provided a uniform and secure money (bank money) for the settlement of large-value transactions... By providing a stable unit of account and a secure means of payment, the Bank reduced the transaction costs and risks associated with the use of a variety of circulating coins."
The progression matters. Private merchants built trust informally. Institutions codified it. And once codified, it became the unit everyone reached for. Not because it was mandated. Because it was reliable.
And that brings us back to the dollar — and why 90% of stablecoins are pegged to it
Stablecoins went straight to the dollar for the same reason. Not because of a grand design. Because when you need something everyone will accept, you reach for what already works. The dollar was — and remains — that thing.
Even at the beginning, the dollar wasn't just a convenient choice. It was doing most of the work.
The shift:
The optimists in this space are genuinely excited, and not without reason. Stablecoins are growing. CBDCs are being piloted across dozens of countries. Banks are beginning to tokenise deposits and other assets. The infrastructure is expanding rapidly, and there is real momentum behind the idea that digital money will eventually work the way the internet works — open, interoperable, borderless.
But it is worth being precise about what is actually growing, because the landscape of digital money is more varied than the conversation suggests. Broadly, three things are developing in parallel. First, privately issued stablecoins like USDC and USDT, which are growing rapidly and are predominantly dollar-linked. Second, Central Bank Digital Currencies (CBDCs), which are government-issued digital versions of national currencies, and which most major economies are exploring or piloting in some form. Third, bank-issued tokenised assets, where traditional banks are beginning to put instruments like deposits and bonds onto blockchain rails. All three are growing. But they are growing for different reasons and toward different ends. The stablecoin conversation tends to conflate all of this. They are not the same thing, and they will not compete on the same terms.
The interoperability argument
In fact, one of the livelier debates in the stablecoin world right now is about interoperability: whether different stablecoins, different blockchains, and different digital currency systems will eventually be able to talk to each other seamlessly. If that happens, the argument goes, then using a euro stablecoin or a Singapore dollar stablecoin would be just as easy as using a dollar one. The friction disappears. The playing field levels.
That is a reasonable technical aspiration. But I think it misses something important about why people choose one currency over another in the first place. Interoperability solves a plumbing problem. It does not solve a trust problem.
The trust problem
Think about what happens when someone in a country with serious inflation gets access to a stablecoin for the first time. What do they want? They want to get out of their local currency. They want something that holds its value and is accepted widely. A stablecoin in their local currency gives them none of that. It's a digital version of exactly the thing they're trying to get away from. Making a weak currency digital doesn't make it stronger.
There's also a trust problem that goes beyond inflation. To trust a local currency stablecoin, you have to trust the currency itself, the company issuing it, whatever they're holding as reserves, the local regulator, the legal system around it. That's a lot of trust to stack up. A dollar stablecoin only asks you to trust the issuer and the dollar. And the dollar has been earning that trust for a long time.
But it is worth being precise about what is actually growing, because the landscape of digital money is more varied than the conversation suggests. Broadly, three things are developing in parallel. First, privately issued stablecoins like USDC and USDT, which are growing rapidly and are predominantly dollar-linked. Second, Central Bank Digital Currencies (CBDCs), which are government-issued digital versions of national currencies, and which most major economies are exploring or piloting in some form. Third, bank-issued tokenised assets, where traditional banks are beginning to put instruments like deposits and bonds onto blockchain rails. All three are growing. But they are growing for different reasons and toward different ends. The stablecoin conversation tends to conflate all of this. They are not the same thing, and they will not compete on the same terms.
The interoperability argument
In fact, one of the livelier debates in the stablecoin world right now is about interoperability: whether different stablecoins, different blockchains, and different digital currency systems will eventually be able to talk to each other seamlessly. If that happens, the argument goes, then using a euro stablecoin or a Singapore dollar stablecoin would be just as easy as using a dollar one. The friction disappears. The playing field levels.
That is a reasonable technical aspiration. But I think it misses something important about why people choose one currency over another in the first place. Interoperability solves a plumbing problem. It does not solve a trust problem.
The trust problem
Think about what happens when someone in a country with serious inflation gets access to a stablecoin for the first time. What do they want? They want to get out of their local currency. They want something that holds its value and is accepted widely. A stablecoin in their local currency gives them none of that. It's a digital version of exactly the thing they're trying to get away from. Making a weak currency digital doesn't make it stronger.
There's also a trust problem that goes beyond inflation. To trust a local currency stablecoin, you have to trust the currency itself, the company issuing it, whatever they're holding as reserves, the local regulator, the legal system around it. That's a lot of trust to stack up. A dollar stablecoin only asks you to trust the issuer and the dollar. And the dollar has been earning that trust for a long time.
Dollar stablecoins also already won the early race. They have depth — lots of buyers and sellers, lots of places to use them, lots of history. For a non-USD stablecoin to actually compete, it can't just exist. It has to be genuinely better for a specific reason in a specific context. That's possible. But it's a different claim than "non-USD stablecoins will grow meaningfully."
The government problem
Governments make this more complicated too. The narrative assumes that non-USD stablecoins will grow because infrastructure enables them. But why would a government that cares about controlling its own currency allow a private stablecoin to compete with it? The more likely outcome is either a government-run digital currency or regulations that push private stablecoins aside. The EU is experimenting with a digital euro, but that's a government project. China's digital yuan exists precisely because the government wants control. These aren't stories about market demand. They're stories about governments trying to hold onto something.
The local currency case — and its limits
Now, there is a genuine case for local currency stablecoins, and it's worth acknowledging honestly. For purely domestic activity — running local payroll, paying suppliers in the same market, holding savings in a familiar currency — a local currency stablecoin makes intuitive sense. It keeps everything in one unit. It is simple and familiar. And there will be businesses and contexts where this is genuinely useful.
But here is the thing. In most markets, local banking infrastructure for domestic transactions already works reasonably well. Moving money within a country, paying staff, settling with local vendors — these are not the broken parts of the system. The parts that are slow, expensive, and genuinely painful are cross-border transactions. That is where stablecoins have made their most compelling case: faster than SWIFT, cheaper than correspondent banking, available at any hour.
And cross-border is precisely where local currency stablecoins run into trouble. The moment you are moving money across borders, you are back to the same questions of trust, liquidity, and acceptance. Who holds this currency at the other end? How easily can it be converted? How deep is the market? A Singapore dollar stablecoin moving from Singapore to a supplier in Brazil reintroduces all the friction that a dollar stablecoin was designed to remove. The very problem stablecoins solve — cross-border speed and simplicity — tends to resolve in favour of the currency that everyone already accepts.
So where does this leave us
Three things seem clear.
First, the expansion of digital money infrastructure does not automatically translate into demand for more currencies. It translates into faster, cheaper movement of whichever currencies people already trust.
Second, the trust and depth that dollar stablecoins have already built creates a gap that is genuinely hard to close — not impossible, but harder than the current narrative suggests.
Third, the strongest case for non-USD stablecoins is domestic, but domestic is also where the problem is least acute. The real prize — cross-border transactions — keeps pointing back to the dollar.
The edge:
The edge:
Every few decades, a new layer of financial infrastructure gets built. And each time, the question that follows is the same: will this new layer change the balance of power between currencies, or will it simply make the existing balance faster and more efficient?
The internet didn't change which languages dominated global commerce. It amplified them. English accounts for nearly 64% of all websites, despite being spoken natively by only 16% of the world's population. And now AI is making this more entrenched, not less. The large language models powering the next layer of the internet are trained predominantly on English data — and MIT researchers have found that even when these models process inputs in other languages, their internal representations default to English as a kind of central processing hub. The technology literally thinks in English. Cable television didn't create new cultural centres either. It extended the reach of existing ones — Hollywood didn't shrink as the world got more screens, it grew. There is a pattern here that the stablecoin conversation has not fully reckoned with. When a new network expands, the things already flowing most powerfully through it tend to flow even more powerfully. Not because the network is designed that way. Just because that is what networks do.
The internet didn't change which languages dominated global commerce. It amplified them. English accounts for nearly 64% of all websites, despite being spoken natively by only 16% of the world's population. And now AI is making this more entrenched, not less. The large language models powering the next layer of the internet are trained predominantly on English data — and MIT researchers have found that even when these models process inputs in other languages, their internal representations default to English as a kind of central processing hub. The technology literally thinks in English. Cable television didn't create new cultural centres either. It extended the reach of existing ones — Hollywood didn't shrink as the world got more screens, it grew. There is a pattern here that the stablecoin conversation has not fully reckoned with. When a new network expands, the things already flowing most powerfully through it tend to flow even more powerfully. Not because the network is designed that way. Just because that is what networks do.
Stablecoins are a new network. And the thing flowing most powerfully through them, from the very beginning, has been the dollar.
"Stablecoins are more likely to reproduce the existing hierarchy of currencies than to flatten it."So here we are — and here is where I think this goes. Three things seem likely. First, dollar stablecoin dominance will deepen, not dilute. The same infrastructure expansion that optimists cite as a reason for multi-currency growth will more likely amplify what already flows most powerfully through the network. The dollar goes more digital, spreads further, embeds deeper. Digital dollarisation, not digital diversity. Second, non-USD stablecoins will grow, but selectively and slowly — sustained by regulation and regional necessity rather than genuine user preference. The euro, Singapore dollar, Hong Kong dollar, renminbi will each find their contexts. But there is a difference between existing and mattering at scale, and that difference will take much longer to close than the current conversation suggests. Third, the most interesting competition will not be between dollar and non-dollar stablecoins. It will be between privately issued stablecoins like USDC and USDT on one side, and government-issued CBDCs on the other. That is the tension that has not yet played out, and it is the one worth watching.
"What if stablecoins aren't the start of a multi-currency digital future? What if they are actually how dollar dominance gets written into the new layer of global finance, faster and more embedded than before?"
A word of caution:
I am not saying local currency stablecoins won't exist or won't find their footing. They will. But the burden of proof is higher than the current conversation acknowledges. A local currency stablecoin has to solve a problem that the dollar stablecoin doesn't already solve, in a context where people actually prefer the local currency. That is a narrower window than the optimists suggest. And the road from here to any genuinely multi-currency digital future is a much longer tail than most are pricing in.
As one economist, David Lubin, put it at a Chatham House discussion on dollar dominance
A final thought:
As one economist, David Lubin, put it at a Chatham House discussion on dollar dominance
“the dollar is the QWERTY keyboard of the international monetary system.”
A final thought:
And then there is the question nobody is quite asking yet. When things become digital, costs tend toward zero. That's true for music, for communication, for software. Is that true for money too? And if the cost of moving money approaches zero, does that change anything about which money people want? Or does it just make it easier to want what they already wanted?
I don't have a clean answer to that. But I think it matters more than most of the current conversation about stablecoins does. Because if moving money becomes essentially free, the question of which money you move becomes the only question left. And that is a question the rails cannot answer.
I don't have a clean answer to that. But I think it matters more than most of the current conversation about stablecoins does. Because if moving money becomes essentially free, the question of which money you move becomes the only question left. And that is a question the rails cannot answer.
Origins & Edges is an essay series written as thinking-in-public. Structured but not settled.
References
References
- Niall Ferguson: The Ascent of Money: A Financial History of the World (2008, updated 2018)
- TRM Labs: 2025 Crypto Adoption and Stablecoin Usage Report — source for 90%+ USD stablecoin dominance and GENIUS Act
- Federal Reserve: Stablecoins in 2025: Developments and Financial Stability Implications (April 2026) — source for GENIUS Act detail
- Jan de Vries: The Industrious Revolution: Consumer Behavior and the Household Economy, 1650 to the Present (Cambridge University Press, 2008)
- Herman Van der Wee: The History of European Banking (1994, 2nd Ed. 2000), p. 89
- Stephen Quinn and William Roberds: "The Bank of Amsterdam and the Leap to Central Banking" — American Economic Review (2007)
- Centre for Democracy and Technology: Report on AI language bias — source for English accounting for 63.7% of websites
- MIT News: Large Language Models Reason About Diverse Data in a General Way (2025) — source for English as internal processing hub
- David Lubin, Chatham House: Members' discussion — "Is this the end of dollar dominance?" (2025)
Note: All images were imagined and created with help of Claude (for image prompts), ChatGPT and Gemini.
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