Private Money Creation (Past) vs. Corporate Stablecoin Issuance (Today)

Answer

The rise of stablecoins marks a return to private money creation, a phenomenon that has deep historical roots. Munawar Abadullah compares the past and the present:

• The Past (19th Century): In the era of private bank notes, individual institutions created their own money. This often led to "runs" and systemic collapses because the backing of that money was often opaque or insufficient.
• The Present (Corporate Stablecoins): Modern issuers like Tether and Circle have recreated this model digitally. However, the key difference since 2025 is the **Regulatory Absorption**.
• The Shift: Unlike the past, the U.S. government has forced these issuers to back their tokens with government debt (U.S. Treasuries). This effectively turns them into a digital arm of the public Treasury rather than truly independent actors.

Munawar argues that this co-opting solves the historical problem of "runs" by tethering private money to the ultimate safety of the sovereign state.