• Stablecoins function as programmable, blockchain-based cash designed to reduce friction in global payments

• Atomic settlement enables faster, cheaper cross-border transactions compared to correspondent banking

• 24/7 issuance and redemption create new liquidity and stress-management challenges due to asset-market timing mismatches

• Stablecoins can efficiently absorb institutional and corporate liquidity, while retail adoption remains constrained by trust and regulation

• Governance, consumer protection, and regulatory clarity are critical to scaling stablecoin adoption

• Stablecoins are redefining cash equivalents and enabling more centralized, real-time treasury management

• A single global stablecoin liquidity pool could reduce idle cash and operational complexity for multinationals

• Growing stablecoin demand for U.S. Treasuries may strengthen bank funding markets and reinforce dollar dominance

Ahead of CeFPro's Treasury & ALM USA in New York City on March 10-11, we sat down with Nidhi Singh, Head of Liquidity and Funding Risk at UBS, to explore how stablecoins are redefining cash, liquidity, and settlement risk, why 24/7 digital money creates new stress-management challenges, and how their growing role could reshape bank funding models and reinforce the global dominance of the U.S. dollar.

From a financial-markets perspective, how would you define a stablecoin, and what economic problem is it actually solving today?

Think of a stablecoin as a digital version of cash that lives on a blockchain. It’s like having a checking account that’s programmable, global, and always accessible. Considering different use cases, the real problem it solves is friction in moving money. In traditional banking, sending funds internationally is slow and expensive, you go through multiple correspondent banks, each taking time and fees. Stablecoins streamline that through atomic settlement. Additionally, for someone in a country with a volatile local currency or without easy access to U.S. banking - a stablecoin is like having a “digital dollar in your pocket.” You can send, receive, and transact globally without opening a U.S. bank account.

How does the 24/7 nature of stablecoins change risk and stress management compared to traditional banks?

Stablecoins run 24/7, but the assets backing them, like U.S. Treasuries, only trade during normal market hours. That creates a timing mismatch. Think of it like a Sunday afternoon rush at a grocery store. If the store only restocks on weekdays, but everyone shows up at once; shelves go empty fast. Stablecoin issuers need reserves that act like 24/7 instant restocking.

Are stablecoins a marginal risk or a structural threat to traditional bank deposits?

While stablecoins are increasingly being positioned as a deposit proxy, their scalability among retail customers is still limited by a trust gap. Unlike traditional banks, which benefit from decades of regulatory oversight, deposit insurance, and a familiar brand, most retail users are still cautious about keeping significant funds in a digital issuer, even if it’s fully backed by high-quality assets.

This means that, in practice, stablecoins can absorb institutional or corporate liquidity efficiently, but widespread adoption among everyday consumers may be slower. The “siphon effect” from bank deposits is unlikely to happen overnight because people still value perceived safety and guaranteed redemption. To scale fully, stablecoin issuers will need transparent governance, strong consumer protections, and credible regulatory backing, essentially replicating the trust infrastructure that banks already have.

How might stablecoins alter how institutions manage cash or think about “risk-free” assets?

Stablecoins are slowly changing what we think of as cash equivalents. In a well- governed future state, companies may no longer need idle cash held across dozens of global accounts. Instead, they can keep a central stablecoin pool and deploy funds exactly when needed. For example, a multinational paying overseas vendors can have a single stablecoin pool and send payments instantly, rather than juggling multiple local bank accounts with slow wires. That could potentially be a huge efficiency gain.

Looking ahead, could stablecoins materially reshape bank funding or the global role of the dollar?

Paradoxically, stablecoins might strengthen dollar dominance. Based on the latest data, stablecoin issuers are now some of the largest holders of U.S. Treasuries globally, surpassing many G20 nations, and creating a permanent, massive bid for U.S. debt.