Money Markets Are Insulated, for Now, From the Stablecoin Mess
- Turmoil on stablecoins has funding market investors on alert
- Strains could potentially emerge if Tether redemptions top 50%
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US money markets have so far proven resilient amid growing turmoil in so-called stablecoins, although investors remain alert to the risk of problems spilling over into key parts of the world’s financial plumbing.
Some stablecoins are backed by assets like Treasury bills and short-term corporate IOUs -- key elements of the dollar funding markets -- and the concern is that if redemptions are big enough they could spark problems in the markets for these underlying assets.