Lecture Title: On the Optimal Level of Stablecoins (and CBDC)

Speaker: Cui Wei, University College London

Lecture Time: April 7, 2026, 10:00

Lecture Location: Room 206 of the School

Abstract:

This paper develops a general-equilibrium model to analyze fiscal tradeoffs introduced by digital money (stablecoins). Researchers find that stablecoins provide liquidity services that enhance transaction efficiency while simultaneously acting as a vehicle for sovereign debt demand; because stablecoins are backed by short-term government securities, they reduce sovereign borrowing costs and mitigate distortionary taxation. Conversely, stablecoins may disintermediate the traditional bankingsector, potentially elevating funding costs and contracting the credit supply necessary for real economic activity. The model identifies an interior optimal level of stablecoins adoption. A calibration exercise suggests that optimal liquidity management—supported by $252–$358 billion in stablecoins—can increase output by 0.94% or welfare by 0.37%.

Speaker Introduction:

Wei Cui obtained bachelor degree in Economics from Tsinghua University and Ph.D. from Princeton University. Currently Associate Professor in Economics at University College London (UCL) and Associate Editor at Economic Journal. Research interests are in macroeconomics and finance, emphasizing how macro policies, in environments with imperfect financial markets, influence productivity, business cycles, and wealth distribution.

Research papers published in leading journals including Journal of Political Economy, Journal of Monetary Economics, Journal of the European Economic Association, Quantitative Economics, American Economic Review (Papers and Proceedings), and many others.