Events at CERGE-EI
Thursday, 19 November, 2026 | 14:15 | Room 402 | Macro Research Seminar
Wei Cui (University College London) "On the Optimal Quantity of Stablecoins"
University College London, United Kingdom
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Meeting number: 2740 265 7575
Meeting password: 693161
Authors: Wei Cui, Jianjun Miao, and Yu Zhu
Abstract: Stablecoins provide payment and decentralized finance (DeFi) services while generating demand for government securities. Their liquidity benefits can lower government borrowing costs and distortionary taxes, but competition with bank deposits can constrain lending and output. We develop a general-equilibrium model to characterize this trade-off and determine optimal issuance. Diminishing liquidity premia can generate a stablecoin Laffer curve, while payment demand, DeFi access, and banking competition shape fiscal and real effects. Calibrating the model to the U.S. economy, we find a welfare-optimal stablecoin stock of 2.89% of GDP. Optimal issuance depends on liquidity demand rather than government financing needs.
