Central bank digital currency rhetoric and stablecoin market responses

Abstract This paper examines how central-bank digital currency (CBDC) rhetoric affects the stablecoin market. Using data from 2020 to 2023, we analyse the effects of central-bank speeches on stablecoin supply and retail attention, controlling for central-bank-specific factors and other shocks. We find that pro-CBDC communication is associated with declines in stablecoin supply, while at the same time retail attention to stablecoins increases. Our results suggest that central-bank CBDC rhetoric can meaningfully influence stablecoin dynamics through anticipatory market responses, including information, signalling, and regulatory-expectations, even in the absence of fully implemented CBDCs.