US money markets have so far proven resilient amid growing turmoil in so-called stablecoins, although investors remain alert to the risk of problems spilling over into key parts of the world’s financial plumbing.
Some stablecoins are backed by assets like Treasury bills and short-term corporate IOUs — key elements of the dollar funding markets — and the concern is that if redemptions are big enough they could spark problems in the markets for these underlying assets.
Yet for now signs of disturbance appear minimal even as Tether — the largest stablecoin used in cryptocurrency markets to facilitate trading, saw its market value drop below the par level it’s meant to be pegged at. This so-called breaking of the buck followed sharply on the heels of an implosion in TerraUSD — another stablecoin — and a rout in cryptocurrency assets.
