How Stablecoins Are Rewriting the Rules of Cash and Liquidity

From a financial markets standpoint, stablecoins are best understood not as speculative instruments but as a new form of cash infrastructure.

Nidhi Singh, head of liquidity and funding for the American arm of an international investment bank and financial services firm, describes a stablecoin as “a digital version of cash that lives on a blockchain.”

In practical terms, she explains, it is “like having a checking account that’s programmable, global, and always accessible.”

The true economic value lies in efficiency. “The real problem it solves is friction in moving money,” Singh says, particularly across borders.

Traditional international payments rely on multiple correspondent banks, each introducing delays and fees. Stablecoins eliminate much of that complexity through atomic settlement, allowing value to move instantly between parties, she says.

The use case extends beyond corporate treasury. For individuals in countries with volatile currencies or limited access to U.S. banking, Singh says a stablecoin can function as a “digital dollar in your pocket.”

It enables people to send, receive, and transact globally without opening a U.S. bank account, offering stability and accessibility that local financial systems may not provide.

However, the always-on nature of stablecoins introduces new challenges for risk and stress management.

“Stablecoins run 24 by 7, but the assets backing them like U.S. Treasuries only trade during normal market hours,” Singh notes. That mismatch creates liquidity pressure during periods of sudden demand.

She compares it to “a Sunday afternoon rush at a grocery store”, where customers arrive en masse but restocking only happens on weekdays.

Without sufficient buffers, reserves can be depleted quickly. As a result, issuers need liquidity that effectively functions as instant restocking capacity at all times.

Concerns that stablecoins could drain traditional bank deposits are, in Singh’s view, overstated in the near term. While they are increasingly positioned as deposit proxies, “their scalability among retail customers is still limited by a trust gap.”