Dollar-based stablecoins are more likely to reinforce the U.S. dollar’s global role than undermine it, a Federal Reserve Bank of Kansas City report argued. Authored by Circle executive Gordon Liao, Cornell University economist Eswar Prasad and economist Tony Zhang, the analysis said approximately 98% of stablecoins are denominated in U.S. dollars and that users overwhelmingly favor dollar-pegged assets for international transactions. Stablecoin issuers typically hold reserves in short-term U.S. Treasurys and cash-equivalent assets, creating a link between stablecoin adoption and demand for U.S. government debt. The report said euro-based stablecoins represent only a very small share of supply and yuan-pegged stablecoins have negligible global usage, with network effects and trust in dollar assets limiting competition. It also called for regulatory clarity to support stability and consumer protection as the market develops. Stablecoins’ total market capitalization has exceeded $150 billion, with uses including remittances, trade finance and decentralized finance.