Stablecoins in the Modern Financial System

Stablecoins combine the speed of crypto with the stability of fiat money. This paper explores their rise, types (fiat-backed, crypto-backed, commodity-backed, and algorithmic), and impact on the financial system. It finds that stablecoins have grown quickly, supporting cross-border payments and financial inclusion. However, they also raise concerns like regulatory uncertainty, risks of losing their peg, and challenges to central banks. While they offer clear benefits, stablecoins need thoughtful regulation to ensure financial stability.