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The Crypto Mile - Steve Hanke: Stablecoins and the Herstatt cross-currency settlement risk

Yahoo UK
Yahoo UK
A short exerpt from Episode 1 of 'The Crypto Mile,' where Brian and Steve discuss the risk of settling off-chain transactions with stablecoins. The Herstatt risk, also known as settlement risk or cross-currency settlement risk, has problematic implications because of the lag between stablecoin transactions and settling them with their pegged currency off-chain. Because stablecoins move irrevocably among buyers and sellers within minutes and the reserve assets that back stablecoins require a day or longer to settle, these deals could fail, leading to the Herstatt.

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