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Contribution Details
| Type | Bachelor's Thesis |
| Scope | Discipline-based scholarship |
| Title | Stablecoins and financial stability risks - evidence from the cryptocurrency market |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Date | 2023 |
| Abstract Text | As digital assets are constantly growing, stablecoins have attracted remarkable attention from central banks regarding financial stability risks. Focusing on 2018-2022, this study uses the DCC-GARCH (1,1) model to analyze the conditional dynamic correlation between stablecoins and traditional financial assets, specifically the energy market, Banks Index, DXY Index, and gold. The results imply that stablecoins significantly correlate with the energy market and the banking sector, while there is no significant co-movement with the DXY Index or gold. Furthermore, the results disclose a strongly increased correlation between all assets during financial market stress. These findings highlight that stablecoins are moving towards integration with the traditional financial market. As policymakers have not yet regulated stablecoins, this study suggests introducing appropriate regulation in the near future. |
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