## Making Stablecoins Stable

_IMF Working Papers, April 10, 2026_

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**Canonical URL:** [Making Stablecoins Stable](https://www.imf.org/en/publications/wp/issues/2026/04/10/making-stablecoins-stable-575348)

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## Bibliographic details
- Authors: Bo Li, Tommaso Mancini-Griffoli, Marcello Miccoli, Brandon Joel Tan, Longmei Zhang
- Published: April 10, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229044349.001

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### Overview and research question
- Payment stablecoins are privately issued digital money with the potential to enhance payment efficiency, foster innovation, and improve financial inclusion.
- Stablecoins are vulnerable to runs and associated welfare losses.
- Core tradeoff examined: requiring issuers to hold safe assets reduces run risk but may lower issuers’ profitability and thus their incentive to provide stablecoins, potentially hampering payment innovation and product variety.
- The paper develops a theoretical framework to navigate the tradeoff between stability and incentivizing issuance.

### Theoretical framework and main findings
- Model basis: Diamond and Dybvig (1983) model of bank runs.
- Key finding: An unregulated private equilibrium is suboptimal.
- Behavioral result: Stablecoin issuers hold risky assets to maximize profits, which increases run risk.
- Social planner improvements:
  - Requiring backing of stablecoins with a safe asset (example given: central bank reserves in a narrow bank setting).
  - Creating conditions for other sources of revenue for issuers (examples given: central bank reserves remuneration; policies for payment data utilization).
- The model serves as a baseline for policy discussion and identifies considerations for further study.

### Policy implications and recommendations
- Require safe-asset backing for stablecoins to lower run risk (explicitly noted: central bank reserves in a narrow bank setting as an example).
- Support issuer profitability through alternative revenue channels to preserve incentives for issuance and payment innovation:
  - Central bank reserves remuneration.
  - Policies enabling payment data utilization.
- Balance regulatory design to avoid suppressing innovation and reducing product variety while ensuring financial stability.

### Subjects and keywords
- Subjects: Bank deposits; Central banks; Commercial banks; Financial institutions; Financial services; Financial statements; International reserves; Public financial management (PFM).
- Keywords: Bank deposits; Commercial banks; digital money; Financial statements; Global; International reserves; issuers' profitability; payment efficiency; payment innovation; reserve backing; stablecoin issuer; Stablecoin issuer; Stablecoins.

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- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2026/04/10/making-stablecoins-stable-575348_