Are stablecoins safer than bank deposits?

There are serious concerns as interest rates rise globally, given that governments have kept interest rates extraordinarily low and even encouraged (or some argue, forced) so-called banks to make decisions which are now coming back to haunt them. The latest casualty in the US is Silicon Valley Bank (SVB) which has become the second biggest bank ever to fail in America. SVB saw its deposits rise from $62billion in 2018, to over $190billion in 2021 and, in an effort to generate better returns than the 0.25% returns offered by the FED, SVB proceeded to acquire 10 year-dated commercial mortgage debt instruments offering 1.5%. The issue has been that these 10-year bonds, if cashed in early, would crystallise huge losses.

SVB had been a ‘darling’ of Silicon Valley in helping tech firms, but once there became a whiff of trouble then depositors withdrew their cash and forced SVB to start encashing its longer-term bonds to meet short term cash demands. However, this rush by depositors has not m…