TechFlow reports that the Federal Reserve Banks of Boston and New York released a report on September 26 titled "Run to Safety: Are Stablecoins the New Money Market Funds?" The report compares stablecoins such as USDT and USDC with money market funds. Key findings include observations that stablecoins and money market funds follow similar patterns during runs, and that stablecoins could pose risks to broader financial stability.
The report states that stablecoins are vulnerable to runs during periods of widespread turmoil in the crypto market or under specific stress events. If stablecoins continue to grow and become more closely linked with key financial markets such as short-term funding markets, they could become a source of financial instability for the broader financial system.
