Leverage and Stablecoin Pegs

Gorton has nothing to currently disclose. He was a consultant to AIG Financial Products from 1996-2008. For comments and suggestions, thanks to Joseph Abadi, Todd Keister, Michael Palumbo, Greg Phelan, K. Sudhir, Chris Waller, and seminar participants at the Office of Financial Research, the Fed Board 2022 Summer Workshop on Money, Banking, Payments, and Finance, and the Fed System Committee on Financial Institutions, Regulation, and Markets. The analysis and conclusions set forth are those of the authors and do not indicate concurrency by members of the Board of Governors of the Federal Reserve System, the Office of Financial Research, or their staffs. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research or the Federal Reserve System.