The post-great recession period has been a historical anomaly, and in general, we expect interest rates (and short-term T-bill yields, which are tightly coupled with interest rates) to be positive. But if and when yield dips to zero, we’ll prioritize stability over yield, meaning we’ll halt income transfers rather than pursue riskier investments. If zero/negative yield truly is the new normal, then we’ll have to seriously reassess.
I just added this as a footnote to the paper (no. 5), but if we reach planetary scale, we’re likely to issue multiple stablecoins in different currencies. Each reserve would then be backed by government bonds denominated in each stablecoin’s currency. So for starters, if T-bills go down to zero yield, we’ll look at other government bonds first, and then generally look at the cash equivalent category for regulatory-compliant, low-risk options.
It’s probably worth doing a little assessment of alternatives now, just in case. I’m curious what options you think are low-risk. outside of t-bills and other government bonds. I’m not an investor, but I’m curious what you folks might have to do if t-bill and other government bond yields zero out.
yep, this is definitely on my agenda. Hard to scope out—is it a 1 hour project or a 10 hour or a 100 hour? I’d guess 10 but I’m not sure. Anyway you are right and sooner rather than later is better 😃
Hi Noah, good to hear from you again!
The post-great recession period has been a historical anomaly, and in general, we expect interest rates (and short-term T-bill yields, which are tightly coupled with interest rates) to be positive. But if and when yield dips to zero, we’ll prioritize stability over yield, meaning we’ll halt income transfers rather than pursue riskier investments. If zero/negative yield truly is the new normal, then we’ll have to seriously reassess.
I just added this as a footnote to the paper (no. 5), but if we reach planetary scale, we’re likely to issue multiple stablecoins in different currencies. Each reserve would then be backed by government bonds denominated in each stablecoin’s currency. So for starters, if T-bills go down to zero yield, we’ll look at other government bonds first, and then generally look at the cash equivalent category for regulatory-compliant, low-risk options.
Hope this helps!
Thanks, Seth.
It’s probably worth doing a little assessment of alternatives now, just in case. I’m curious what options you think are low-risk. outside of t-bills and other government bonds. I’m not an investor, but I’m curious what you folks might have to do if t-bill and other government bond yields zero out.
yep, this is definitely on my agenda. Hard to scope out—is it a 1 hour project or a 10 hour or a 100 hour? I’d guess 10 but I’m not sure. Anyway you are right and sooner rather than later is better 😃