Cornell’s Eswar Prasad says stablecoins are reinforcing dollar dominance, not threatening it

Cornell professor Eswar Prasad made the case on Bloomberg that dollar-backed stablecoins are strengthening, not undermining, the US dollar’s position in the global financial system. Dollar-pegged tokens now account for roughly 98% of the global stablecoin market by capitalization. It’s near-total dominance of a fast-growing asset class, and it means the practical effect of stablecoins has been to digitize the dollar rather than compete with it. The Treasury connection Stablecoins need reserves. And the preferred reserve asset, increasingly by regulatory design, is US Treasury bills. Treasury Secretary Scott Bessent has contextualized stablecoin market growth in the range of $2-3 trillion, with issuers potentially holding around $125 billion in Treasury bills as of late 2025. That creates a new, structurally embedded source of demand for US government debt. Prasad’s analysis, which he’s published across outlets like the Financial Times and IMF Finance & Development, frames this as a feedback loop. Stablecoins grow, they buy Treasuries to back their tokens, that demand supports the Treasury market, and that in turn reinforces confidence in the dollar. Market growth estimates for ...