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Introduction: Stablecoins, Statecraft, and the New Dollar Megastructure

When most people think of digital money, they picture Bitcoin or central bank digital currencies (CBDCs) like China’s digital yuan. But beneath the surface, a quieter revolution is underway—one that is reshaping global monetary power. At the center of this transformation is what Izabella Kaminska, founder of The Blind Spot senior finance editor at Politico Europe, calls “redollarization”: the resurgence of US monetary dominance through the rise of stablecoins.

These digital tokens, pegged to fiat currencies and transacted over public blockchains, are becoming an essential tool of financial statecraft. As Kaminska explains, stablecoins are not just a technological upgrade—they are redefining who controls global flows of money, debt, and economic influence.

In this new era, the US is using stablecoins to repatriate demand for US Treasuries, strengthen its fiscal base, and reinforce the dollar’s status as the world’s reserve currency. The resulting “dollar megastructure,” powered by blockchain and regulatory shifts like the Genius Act, represents a powerful form of digital statecraft.

Kaminska’s reporting reframes the debate: stablecoins are about far more than efficiency or innovation—they’re about power, sovereignty, and the future global order.

The following sections break down Kaminska’s key arguments, exploring stablecoins’ historical roots, the decline of CBDCs, the regulatory pivot, and—most crucially—the geopolitical chess game now unfolding through stablecoin adoption.

Stablecoins: Old Wine in New Digital Bottles

At first glance, stablecoins might seem like a technological novelty—cryptographic tokens pegged to fiat currencies and transacted over public blockchains. But Kaminska quickly dispels the notion that stablecoins are an entirely new phenomenon. “Stablecoins are fascinating,” she says, but emphasizes that their structure is “a persistent structure that we see continuously reappearing in finance.”

She draws a direct line from stablecoins back to money market funds, traditional e-commerce payment systems like PayPal, and even currency board regimes—all of which, in one form or another, “bypass the conventional two-tier financial system.” This recurring pattern, Kaminska explains, is that “shadow banking mechanisms” emerge to fill gaps in the existing system, offering alternatives that sometimes rival and sometimes threaten mainstream banking.

What’s new about stablecoins, however, is their “real USP” (Unique Selling Point)—the ability to be transacted directly over public blockchains, sidestepping the traditional banking rails. Yet even here, she sees echoes of the past: “This is also another example of how the eurodollar markets evolved…transactable outside of the US banking system.” The lesson? Financial innovation often reinvents old ideas in new technological forms.

CBDCs: From Hype to Hesitation

If stablecoins are ascendant, what of central bank digital currencies, the much-discussed digital dollars, euros, and yuan? Kaminska is clear: “CBDCs have the stink on them. Nobody wants to talk about them anymore—apart from the Europeans.” Only the ECB, she notes, is still pitching the digital euro, while other central banks have cooled on the idea.

This is a sharp reversal from just a few years ago when “there was such enthusiasm for CBDCs” among central bankers. The attraction was obvious: a pioneering technology, more control, and direct connection between central banks and citizens. But the drawbacks soon became apparent:

• Disintermediation of private banks: CBDCs threatened to upend the two-tier banking system, concentrating too much power at the center.
• Surveillance fears: The potential for state monitoring of every transaction alarmed privacy advocates and the general public alike.
• Cultural misfit: Countries like the UK, with a history of decentralized banking, found the idea of retail CBDCs especially unpalatable.

China, with its top-down market structure, managed to launch a digital yuan, but even there, “adoption has been slow and there’s a general predisposition towards existing e-money providers like Alipay and WeChat.” Similar disappointments have unfolded in Nigeria and the Bahamas.

Kaminska suggests that, in many Western countries, CBDCs were less a genuine objective and more a strategic threat—“a stick to force the banks to innovate and embrace tokenization.” In her words, “It’s starting to look a lot like it was a psyop to get the banks fully into innovation mode.” Now, as she points out, “the central banking community is slowly recognizing that there just wasn’t going to be the level of demand” for CBDCs.

The Regulatory Pivot: The GENIUS Act and Stablecoin Legitimacy

While CBDCs have faltered, stablecoins have surged, especially in the US. A key development is the recent passage of the GENIUS Act, which mandates a 100% reserve backing for all stablecoins issued in or traded into the US market. Kaminska sees this as a watershed moment:

“Worse than that, US stablecoins come along, which are already here, and no one had to fund them with a public balance sheet, and they completely disrupt your CBDC. I mean, that would be terrible.”

The GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins) Act, she explains, is about “normalizing onshore issuance” and ensuring that stablecoins are fully backed by safe assets—mostly US Treasuries. This not only safeguards users but also ensures that the growth of stablecoins directly supports US government debt markets.

Europe’s anxiety is palpable. As Christine Lagarde, ECB President, has admitted, there are real fears that dollar stablecoins might “lure savings out of the euro system.” With dollar-based stablecoins now representing the vast majority of the market, the debate has shifted to how other currency zones can compete.

Redollarization and Statecraft: The Geopolitics of Digital Money

Perhaps Kaminska’s most original and far-reaching analysis is her argument that stablecoins are now a tool of financial statecraft—a mechanism for “redollarization” and the reinforcement of US economic power.

She points out that all roads—CBDCs, stablecoins, or tokenized assets—lead to a narrower banking model: “Regardless of the flavor of the transition, narrower banking is the outcome.” This means greater collateralization, less elastic money creation, and a premium placed on the safest collateral: government bonds.

“When you start realizing that this is all about collateral and the flavor of collateral, you realize that… it creates a permanent bid for collateral. And the key collateral in question is obviously national government bonds.”

Stablecoins, by requiring issuers to hold Treasuries as reserves, create a sustained and growing demand for US debt. But there’s more: the repatriation of collateral. In the old system, foreign holders of Treasuries (like China) earned the interest and tax benefits; now, as stablecoins’ backing is increasingly held domestically, those benefits accrue to the US.

“Imagine a scenario now where 90% of the assets that back the international float of the dollar now sit in the US instead of on China’s balance sheet. Suddenly that’s a really big benefit for the US because all the interest arbitrage that would have been earned by China is now arguably going to be taxed domestically.”

This, Kaminska argues, is a subtle but powerful form of financial repression—making the private sector, not just banks but also stablecoin issuers and holders, the buyers of government debt. Yet it’s “not as obvious as dictating or mandating the banks to buy your bonds.” Instead, the arbitrage opportunities and regulatory incentives do the work voluntarily.

The Mechanics

The genius of the US approach, Kaminska notes, is that it leverages regulation to ensure that stablecoins back their liabilities with high-quality, domestic collateral. The GENIUS Act goes further, establishing a new super senior tranche in the creditor hierarchy for bank-issued stablecoins.

This provision, she explains, was “one of the most contentious parts of the legislation. The banks were very much against it.” But its impact is potentially transformative: for banks that issue stablecoins, stablecoin holders now have claims that supersede even senior bondholders in the event of a bank failure.

“Depositors will be very likely to shift into stablecoins if they’re issued by banks. Because why would you fund a bank on lesser terms if you don’t have to?”

This creates a powerful incentive for banks to issue stablecoins—and for depositors to prefer them over traditional deposits. It’s a form of ring-fencing the transactional float—the money used for payments—ensuring that it is fully backed and protected, thereby enhancing financial stability.

Another crucial debate is over fungibility: can offshore stablecoins (like Tether, based in El Salvador) be treated as equivalent to onshore, Genius-compliant coins? Kaminska notes that, as of her last analysis, “there was an ambiguity over whether offshore stablecoins… would be considered fungible with onshore coins.” The outcome of this debate has major implications for the global reach of US regulatory power.

Stablecoins as a Lifeboat: Navigating the Transition

Kaminska is careful to situate stablecoins in the broader context of a monetary transition. She describes them as a “lifeboat” that helps the system pivot “from the hyperscaled system that dominated after 2008 to one that’s going to become more fragmented but transparent.” In her view, stablecoins are not just a payments innovation; they are a bridge to a new, more sustainable model of global finance.

Stablecoins’ programmable nature and blockchain-based infrastructure also mean that they can be backed by a wide range of assets—not just Treasuries, but also corporate bonds, gold, and even cryptocurrencies like Bitcoin. This flexibility could lead to further innovation in how money is structured and used worldwide.

At the same time, Kaminska acknowledges that the underlying technology is complex and that “users don’t necessarily understand that a stablecoin can travel over different types of rails and each rail… has different shortcomings and benefits.” But for banks, the appeal is clear: they can “leverage public infrastructure for payments that is available and cheap,” outsourcing the cost and complexity to the private sector and speculators.

The Dollar Megastructure: A New Era of Global Money

Kaminska’s core thesis is that stablecoins represent the rollout of a new “dollar megastructure”—one built on blockchain technology, but reinforcing and extending the dominance of the US dollar. The Genius Act, by requiring 100% reserve backing with US Treasuries or equivalents, is at the heart of this strategy.

“It is attempting to make sure that the dollar maintains its role as a reserve currency in international payments as long as stablecoins continue to grow in their international use.”

This new megastructure, Kaminska argues, has profound implications:

• It creates a persistent, private-sector-driven demand for US Treasuries, supporting government financing.
• It internationalizes the dollar in a way that is more efficient and transparent than the old eurodollar system.
• It gives the US government new tools for regulating and taxing the global use of its currency.

Crucially, all this is happening without the need for a top-down, state-mandated digital currency. Instead, the US is harnessing market forces, regulatory incentives, and technological innovation to reinforce its monetary primacy.

Conclusion: The Blind Spot on the Monetary Horizon

As Kaminska sees it, the shift from CBDCs to stablecoins is not just a technological pivot, but a strategic reimagining of money, statecraft, and global financial stability. The “lifeboat” of stablecoins is carrying the world through a period of transition, bridging the gap between the old, fragmented system and a new one that is both more secure and more transparent.

Yet, she cautions, the story is still unfolding. Questions remain about the fungibility of onshore and offshore stablecoins, the ultimate impact on banking stability, and the geopolitical consequences of a world ever more dependent on dollar-backed digital assets.

In a rapidly evolving landscape, her work reminds us that the real revolution in money is not where most people are looking—but in the blind spots where old structures are being rebuilt, quietly, for a new digital era.

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