Stablecoin flows and spillovers to FX markets

by Iñaki Aldasoro, Paula Beltrán, Federico Grinberg<br />Using data on four USD-pegged stablecoins and 27 fiat currencies, this paper documents spillovers from stablecoin-based foreign exchange (FX) to traditional FXmarkets. We document a gap between the cost of acquiring dollars via stablecoins and via the spot FX market (parity deviations). To establish a causal link between stablecoin flows and FX markets, w…