Hi Haseeb,

Too bad I just saw this; after three months, maybe I am late to the party.

I have a question: with non-collateralized stablecoins, can’t stability be guaranteed by having several “suppliers” of these stablecoins, basically central banks that compete with each other? Right now, of course, central banks don’t really compete with each other. Although we know that China would want the Yuan (Renminbi)to be the international currency of settlement, the USD and Euro being more widely used as international currency of invoicing and settlement do not make these currencies dominant for small purchases within any country other than these currencies’ respective native countries. My point is that a fiat currency is widely used by consumers only within its territory.

Stablecoins, on the other hand, are theoretically usable anywhere. As such, the future situation with stablecoins would be very different from the status quo: there would be real competition among these “private” currencies. What’s more, because (centralized or decentralized) management of these stablecoins would be uncoordinated, at any given time these would be in different phases of boom/bust cycles so not all of them would be hit hard by any future economic storm. Just like normal competing companies, a number of these stablecoin sources would perform better than others, but the winners would be those that satisfy best what the market wants: a stable currency even in the face of occasional economic storms. In effect, the Schelling point (assuming I understand it correctly) would be the configuration of all companies engaged in the management of stablecoins.

I am referencing my comment to another, similar piece:
https://medium.com/@carlostapang_15490/on-rapid-growth-and-skewed-incentives-i-wonder-whether-the-method-of-distribution-can-prevent-b2696502d87b