How Will Stablecoins Integrate with the Financial System?

Stablecoins are transforming from niche crypto instruments to critical programmable infrastructure, with profound implications for global finance and business strategy. By enabling instantaneous, low-cost settlement, they bridge disparate domestic payment systems, dismantle inefficiencies in entrenched card networks and legacy rails, and unlock decentralized finance applications.

Christian Catalini’s analysis in this paper delineates the core stablecoin archetypes — fully reserved variants, deposit tokens, tokenized money-market funds and algorithmic constructs — assessing their trade-offs in reserve robustness, consumer protection, regulatory compliance and long-term business viability. Catalini then charts five geopolitical pathways, ranging from a lightly upgraded Bretton Woods order to fragmented multipolar or more chaotic monetary regimes, unpacking how these trajectories could propel or impede stablecoin adoption.

While the United States leverages stablecoins to reinforce global US dollar dominance, rising tariffs and de-dollarization trends are boosting demand for gold and other non-dollar-denominated and commodity-backed stablecoins, a trend especially prominent among the BRICS nations. Euro-backed stablecoins are also gaining strength and, together with the digital euro, may pose a threat to US dollar hegemony.

In this paper, Sharat Chandra considers how stablecoins may be the answer to geoeconomic fragmentation by providing solutions that enhance trade efficiency in response to protectionist policies and regional alliances, noting “integration of stablecoins in the new monetary order would require finding a delicate balance between innovation, mitigating financial stability risks and building a global consensus on regulation.”

In this policy brief, Jake Okechukwu Effoduh writes that while the particular concerns of states and entities from the Global North tend to dominate key multilateral artificial intelligence (AI) governance schemes, “a handful of African states (many of them leaders in AI discourse on the continent) also participate meaningfully in a number of multilateral agreements. Accordingly, strategies and procedures enacted under these agreements often shape AI governance on the African continent.”

African states are also implementing AI governance at the national and regional levels, an important theme of which is “the leveraging of AI technologies to improve the conditions of African peoples. While there is a noticeable inclination toward correcting for colonially inflected marginalization undergirding AI governance on the continent, there is more room for African states to take bold steps toward placing decolonial praxes at the centre of global and national AI governance both nationally and continentally.”

The Digital Policy Hub at CIGI is a collaborative space for emerging scholars and innovative thinkers from the social, natural and applied sciences. Here are the most recent working papers published by Hub fellows.

Joseph Scarfone: “AI Standards Transparency: Decoding the Next Corporate Disclosures Frontier”

Shirley Anne Scharf: “Innovation Policy and Venture Capital: Korea, Sweden and Canada”

Follow the links on the Hub webpage to learn more about the Hub scholars and their work.

“The WTO has many dysfunctional working practices, all of which precede Trump’s first term in office. So it would be unfair to suggest that the US president is bulldozing a previously well-oiled institution.”

In this opinion, first published by the Financial Times, Hector Torres argues that the legitimacy crisis facing the WTO stems from outdated rules, stalled reforms and miscalculations about the costs of globalization — failures that go well beyond Trump.

“Advanced humanoids will be especially easy to anthropomorphize, provoking both excitement and fear.” Kyle Hiebert argues that the rise of humanoid robots and AI-powered machines will disrupt more than jobs, amplifying power in liberal democracies, provoking public fear and excitement, and fuelling political conflict over social norms, rights and security. However, as Hiebert notes, “when both conservatives and progressives resist the temptation of radical revolution, and stay loyal to democratic traditions and institutions, democracies prove themselves to be highly agile.”

“Procurement is going to be our biggest obstacle here,” former Chief of the Defence Staff Rick Hillier recently said. In this opinion piece, Matt Malone argues that Canada’s complex purchasing processes threaten security, efficiency and public trust, and that “transparent procurement is not only a low-cost way to save money; it also makes it easier to engage in evidence-based policy and law reform to improve accountability.”

Malone warns that without meaningful reforms, including proactive disclosure and stronger oversight, the country risks repeating past procurement scandals while missing opportunities to generate savings and restore confidence in government.