Annual Economic Report 2025, Chapter III: The next-generation monetary and financial system

Claims Supported by This Source

1. The three tests of money: singleness, elasticity, and integrity.
2. Stablecoins fail the three tests. Asset-backed types are similar to digital bearer instruments; what is received is a liability of a specific issuer, and since there is no settlement on the central bank's balance sheet, singleness cannot be guaranteed (e.g., red dollars and blue dollars).
3. The cash-in-advance constraint, requiring full prepayment, undermines elasticity. As bearer instruments on a public blockchain, they become an option for illicit use, and the lack of KYC undermines integrity.
4. Tension between the promise of constant redeemability at par and a business model that takes on liquidity and credit risks. If they grow, there is a tail risk of a fire sale of safe assets.
5. Bitcoin began in 2009, but nearly 20 years later, it is not a meaningful currency, is not widely used for payments or as a unit of account, and is best understood as a speculative asset.
6. A unified ledger, which tokenizes central bank reserves, bank deposits, and financial assets onto a single ledger, is promising.

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