Can Stablecoins Prevent Price Increases and Financial Instability? An Economic and Legal Perspective

Abstract This study investigates by adopting a legal view how feasible could be for stablecoins to prevent price and financial instability. The composition, reliability and stability features of the reserves backing stablecoins as well as the consequent perspectives for acquiring the ‘legal tender’ label are examined. Adopting stablecoins as defence against inflation and financial fluctuations necessitates a common legal framework in a worldwide extent and the creation of a global common monetary union. By building on previous research and combining a legal and economic approach, this paper argues that the prerequisites for reaping the benefits from stablecoins are very difficult though not impossible to be realized.