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George Selgin Profile picture
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22 Jul, 4 tweets, 3 min read
Thread: So, Mr. Burstein complains that neither Tether nor Circle is a "stablecoin" in anything but name. Well, here is USDC's price chart for the last year:
Evidently, so far as Circle is concerned, Burstein can only mean that, instead of being always worth exactly $1, USDC (1) usually trades at an almost constant albeit tiny _premium_ relative to USD and (2) occasionally spikes above it.
If that's "instability," what's wrong with it? Just what is Mr. Burstein seeing that I'm not seeing? Or is he merely seeing an "unregulated" assets and deciding, on strictly a priori grounds, that it _must_ be unstable and therefore in need of greater regulation?
I ask these questions, in all sincerity, of my stablecoin-skeptic FinTwit friends. Can we talk reasonably about these coins, or must we allow fears to stand in for facts? @jp_koning @Frances_Coppola @DanAwrey @JoelKatz @ahcastor @lawrencehwhite1

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More from @GeorgeSelgin

George Selgin Profile picture
23 Jul
I agree 100% with Steve's take on fiat money. It's value doesn't rest upon it's being a redeemable claim to anything. The mere fact fiat can purchase things at varying prices, including "get out of jail" cards from tax authorities, doesn't make it a "claim" to anything.
Because the U.S. government can decide at any time to alter the # of fiat dollars it takes to satisfy tax obligations, those dollars are not "claims" to any pre-agreed upon amount of "get out of jail" cards (or gov't services or whatever you choose to call what tax payments buy).
In contrast, a commercial bank is not free to say to its depositors, "We regret to inform you that we've raised the price of Federal Reserve notes, so that it will now take $2 of your credits with us to purchase a $1 bill."

A "claim" is a debt is a fixed-price commitment.
Read 10 tweets
George Selgin Profile picture
22 Jul
Evidently @RaulACarrillo didn't like my argument: he tweeted two snide dismissals, only to delete them before I could reply. But as they are still visible (I include a screenshot of one) I will reply to it.
Now, Mr. Carrillo, my comments referred only to the question of "monopoly," the definition of which is or ought to be known to any 1st year econ student, or anyone who has a decent vocabulary.
(That Wikipedia, which you also take me to task for citing, happens to offer the stnd. definition hardly makes it wrong.)

My point is that entry into the banking business is not so strict as to allow that business to be characterized as a "monopoly"
Read 4 tweets
George Selgin Profile picture
22 Jul
I enjoyed hearing @MehrsaBaradaran and others discuss strategies for banking the unbanked during the recent house hearing. But I want to push back against something Mehrsa said then.
She said, "We give banks a charter, and they have a monopoly on payments and financial transactions and credit." With all due respect to Mehrsa, this is abusing the plain meaning of terms.
To refer just to Wikipedia's definition (the first definition that comes up on Google) "A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity."
Read 10 tweets
George Selgin Profile picture
21 Jul
Want to write like an academic economist? Here's my sure-fire guide to Standard Econ English.
"Recent." Used with "writings" or "work" in your opening sentence to assure readers that you are au courant, which is to say, determining your subject matter the way herring determine which way to swim.
"The remainder of this paper is structured as follows." Indispensable start of your introduction's final paragraph, which you must include because the preceding paragraphs have somehow failed to do what they're supposed to.
Read 13 tweets
George Selgin Profile picture
20 Jul
Thread: The right way to go about deciding how to regulate stablecoins.

Having explained why loose (and misinformed) comparisons with 19th century banknotes are the wrong way to proceed, I thought I'd offer some positive suggestions.
(1) Acknowledge the fact that there are many types of stablecoins, with different underlying technologies and principle uses. It is highly unlikely that any broad-brush regulatory treatment will be appropriate to all.
(2) Stop calling them "money." They are niche exchange media, not generally accepted exchange media. And that is itself not a bad thing so long as national monies are also available.
Read 13 tweets
George Selgin Profile picture
20 Jul
Anti- GZ, cont'd: the rise of national currency (pp. 27ff.) GZ conclude their discussion of antebellum currency by stating that, because that currency violated the NQA (No Questions Asked) principle, the antebellum "community had no money."
As I've already pointed out, regarded as a description of conditions on the eve of the Civil War, is very misleading, in part because there was by then no shortage of official coins, which were undoubtedly national NQA means of exchange.
As for state banknotes were, although discounting cont'd to disqualify them as truly "national" currencies, by the 1860s these discounts tended to be modest. Furthermore, almost all state bank notes were par monies for their "state" communities, if not in some surrounding states.
Read 25 tweets

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