Stablecoins are quickly emerging as Washington’s preferred tool to protect the dollar’s global role. Instead of building a central bank digital currency (CBDC), the U.S. appears to be relying on private-sector innovation. As a result, the future of cross-border payments could look very different, according to Deutsche Bank.
Why the Dollar Still Leads
The dollar’s strength rests on two main pillars. First, it is the world’s top savings currency, giving the U.S. what economists call an “exorbitant privilege.” Second, it dominates international payments, which gives Washington enormous influence.
These forces are closely linked. When companies invoice in dollars, they also tend to save in dollars. In turn, this reinforces the entire system.
Cracks in the Foundation
However, pressure is building. The dollar’s share of global reserves has been slipping. At the same time, competition in payments is rising due to new technologies, rival systems, and demand in underserved markets.
Therefore, Deutsche Bank argues that stablecoins may be the U.S.’ strongest defense. Unlike CBDCs, they are already taking shape through private-sector initiatives.
Europe and China’s Dilemma
For Europe, dollar-backed stablecoins could make it harder to expand the euro’s global role. To respond, Deutsche Bank suggests the EU should create its own ecosystem of euro stablecoins issued by banks and corporations. In addition, Europe benefits from stronger institutions, open markets, and a larger share of trade invoiced in euros compared to China.
China faces greater constraints. Because its capital account is tightly managed and offshore renminbi liquidity is limited, Beijing has less room to compete. Nevertheless, the stakes are higher for China. Payments independence is central to its push for reserve currency status. As a result, global competition could even force China to open up more.
The Bigger Question
The deeper issue is whether stablecoins actually strengthen the U.S. system. Some argue they could raise demand for U.S. Treasuries. Yet Deutsche Bank calls this a “red herring.”
More importantly, stablecoins could cement the private sector’s reliance on dollar payments. And because invoicing often drives savings and reserves, this link could help the U.S. maintain its monetary dominance.
As Deutsche Bank concludes: the true power of stablecoins lies in securing—or even expanding—the world’s commitment to the dollar.
Stablecoins are not just a crypto trend. Instead, they may become the U.S.’ quiet weapon in the fight to preserve global dominance.
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