Rod Garratt
Professor of Economics, UC Santa Barbara
Talk title
Banking on Blockchain: Regulatory Clarity and Commercial Bank Participation in Stablecoin Markets
Abstract
The stablecoin market is currently dominated by a small number of issuers who control the vast majority of market share. This concentration reflects the first-mover advantages and network effects that have shaped the early development of the sector. This paper explores how regulatory changes in the United States that allow traditional financial institutions to enter the stablecoin market will influence the competitive landscape. Rather than competing directly for crypto-native users, banks are expected to adopt stablecoins as digital instruments similar to checks, integrating them into services for their existing customer base. To fully meet the needs of traditional finance, a robust clearing mechanism for stablecoins will be essential.
Bio
Rod Garratt is a professor in the economics department at the University of California, Santa Barbara. He has worked as a Senior Advisor at the Bank for International Settlements, a Research Advisor to the Bank of England and is a former Vice President of the Federal Reserve Bank of New York. He has also held visiting scholar positions at the Bank of Canada and the International Monetary Fund. During his time at the FRBNY he co-led the Virtual Currency Working Group for the Federal Reserve System. From 2015-17 he was a member of the team that completed Project Jasper (phase 1 and 2), the first proof of concept for a wholesale interbank payment system that uses distributed ledger technology. In 2018 he testified before the Subcommittee on Monetary Policy and Trade, U.S. House of Representatives at a hearing on “The Future of Money: Digital Currency.” Garratt received his undergraduate degree from the University of Waterloo and his Ph.D. from Cornell University. He has published in the top economics journals including Econometrica, the American Economic Review and the Journal of Political Economy. He is an Associate Editor of the European Economic Review and serves on the editorial boards of the Journal of Network Theory in Finance and Digital Finance.