Davis Polk partner Jai Massari recently co-authored “Stablecoins and the Future of Money” in Harvard Business Review. Massari and co-author Christian Catalini, the co-creator of Diem, chief economist of the Diem Association and a research scientist at the MIT Sloan School of Management, discuss the significant role cryptocurrencies will play in the future financial system and three possible approaches to safely harness the technology: 1) true stablecoins, which are non-interest bearing coins designed to have stable value against a reference currency; 2) demand coins, which are demand deposit claims against insured commercial banks, on blockchain rails; and 3) central bank digital currencies, which are cash on digital rails and could represent the public sector’s response to decreasing demand for physical cash.

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