The Daily Peg
The Central Bank of Russia opens a consultation on the creation of a ruble stablecoin market and the PBOC withholds details about its new overnight funding operation.
Editorial Hello
The rest of the BIS’ annual economic report came out on Sunday. While the majority of the newly released chapters do not strictly pertain to stablecoins, they still offer important insights into the degree to which FX swaps are mitigating dollar liquidity mismatches.
“When FX swaps are not rolled over, asset managers must source dollars to close positions, which can trigger dollar funding strains,” the report observes. The BIS concern is that over the past few years, it’s non-bank financial institutions (asset managers, pension funds, insurers, hedge funds) that have come to play a much larger role in dollar intermediation.
The report comes as China’s PBOC officially began conducting monetary policy through overnight reverse repos for the first time. Until now, the Bank has preferred to conduct monetary policy-related interventions through 7-day reverse repos. But Governor Pan Gongsheng warned at the Lujiazui Forum on June 17 that the PBOC wants to improve control over very short-term interest rates by narrowing its interest-rate corridor and expanding overnight operations.
