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Opinion
Andy Mukherjee

A Digital Money Rush Is Great. A Run, Not So Much

Stablecoins will become much more widely used and need balanced regulation before they’re too big to fail.

Out for an old-style run: Customers waiting to withdraw their money from Northern Rock bank during the Great Financial Crisis.

Out for an old-style run: Customers waiting to withdraw their money from Northern Rock bank during the Great Financial Crisis.

Photographer: Johnny Green/PA Images/Getty

In Hong Kong, money has been privately issued since 1846. The bill in my wallet is a promise from HSBC Holdings Plc’s local banking unit to pay the value written on it. In accepting it, I gave no thought to the creditworthiness of the lender. Whoever it’s passed on to will also take the banknote at face value, and won’t ask for Hong Kong dollars printed by Standard Chartered Plc instead.

Not requiring due diligence on cash sounds commonsensical, but it’s actually a highly valuable property of money everywhere. Indeed NQA, or “No Questions Asked,” is so important that Yale School of Management finance professor Gary Gorton and Federal Reserve attorney Jeffery Zhang have made it the centerpiece of their new paper, titled “Taming Wildcat Stablecoins.”