Stablecoin Power Shift? Dollar Dominance, AI, and Europe’s Big Question (EP.301)

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Because we've got to create the
flywheel, so you've got to

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create the usage and we're in a
bit of a chicken and egg.

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People are saying, oh, there
isn't enough liquidity so we

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can't use it.
Well, if you're not going to use

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it, there won't be liquidity.
So it's kind of how do we break

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that chicken and egg?
This is Money Never Sleeps.

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Sharp rips, big ideas and real
insights from smart people.

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I'm Pete Townsend.
Let's go money.

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Never sleeps, pal.
So we've got Garrett Cassidy on

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the show, and it's so
appropriate that he is on the

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show for the new era of Money
Never Sleeps, Sharper, Faster

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video lead, and that this is the
first cut of the new era.

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Now you're a tech star as alum,
you're an exited fintech

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founder, mentor, advisor,
independent director, and also

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you're one of the first people I
spoke with about fintech way

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back in 2013 when you and Gary
Laden dropped into my office to

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get my take on a fintech
accelerator that NDRC we're

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running here in Ireland.
So great to have you on.

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Wonderful to do this.
First one with you, Garrett.

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Yeah, no, great to be here.
And to add to all that, I'm

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recovered from 20 years in
French markets and banking as

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well.
So like, like yourself.

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So yeah.
You've got the scars.

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Yeah.
Yeah, Absolutely.

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Absolutely.
No, we both do.

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We both do.
So listen, you and I have been

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talking a lot about stable coins
recently, especially last week

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when we were in Amsterdam for
the Techstars ABN Amro Future of

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Finance Accelerator Demo Day,
which was an awesome event.

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Shout out to Allard Look Singer
for leading the charge with that

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program.
And we had a few conversations

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afterwards.
But you found something that you

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wanted to pick apart a bit with
regards to a story that you saw

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on stable coins in the last
couple of days.

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Tell us about it.
Yes, So in the FT this week,

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Martin Wolf has written a
written a really interesting

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piece on stable coins.
Really his headline is why we

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should worry, why the world
should worry about them.

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But I think that that the
underlying pieces why the world

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should worry about U.S. dollar
stable coins as in the

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dollarization and what some of
those implications are.

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Some some of this can sound
challenging and native like we

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need money on chain, we need on
chain money to do tokenization.

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But I think we need to be honest
about some of the challenges

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that exist.
And we also we also need to be

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open as to what are the
different ways of tokenizing.

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But I think, you know, Martin
Wolf obviously comes from a very

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long line of deep economic
thinking and is has a has a very

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kind of interesting take on the
challenge around US, you know,

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U.S.
Dollar stable coins and ask some

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questions as why is the US
pushing it so hard and what does

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it mean for other countries?
Yeah.

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Why do you think the US is
pushing it so hard?

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And is that political rhetoric,
or is that the truth of what

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this could become?
I probably do buy a lot of what

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Martin is saying, which is this
is about geopolitics as much as

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economics.
It's dollar dominance.

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It's protect, sorry.
It's protecting.

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Obviously dollars already pretty
dominant, but it's protecting

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dollar dominance.
Obviously there is the, there

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isn't the other narrative which
is, which is genuine around, you

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know, US payment systems are
old, are slow, are challenging

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Remittances, you know, are
expensive.

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Cards are expensive, much more
expensive than we're used to in

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Europe.
Umm, but fundamentally it's

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like, why?
Why is it being pushed?

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Well, there is a dollars
dollarization agenda.

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There's also a potential
underlying U.S.

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Treasury agenda.
You know, borrowing from the

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world.
I kind of step back from all

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this and think you know, you
have European sovereignty,

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right?
And to say that if the world is

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using U.S. dollar denominated
stable coins and stable coins

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have well 99% of stable coin
value is pegged to the US

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dollar.
And what I think about 2/3 of

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the value, the 300 billion plus
now in stable coin value is

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backed by U.S.
Treasuries.

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Now we have some other assets
that are backing some of the

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stable coins, but primarily it's
it's AUS treasury play, which is

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great for the US macro seen in
one way shape or form and in

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many ways shapes or form.
But I just don't see 99% of the

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stable coin value being
represented by the US dollar

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when we're at 2 trillion worth
of stable coins.

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Yeah, I just don't.
I don't see that.

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Yeah.
And I think there's, there's an

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interesting 1 here and it is one
that the article pushes as well,

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is that the other regulators and
central banks need to be

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careful.
And this, this is kind of an

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interesting point because Bank
of England released some stuff

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recently and there is a lot of
pushback and we're all going,

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what are you talking about and
why are you doing this?

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And then you reason actually
there is a, there is a valid

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reason for sovereignty and
there's lots of challenges with

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my car in in Europe.
And one of the ones that gets

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pushed hard is the limitation on
non euro stable coins.

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There's a huge push from some of
the big international stable

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coin issuers for changes to
that.

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But actually I think it's 1
outside of the US.

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We need to ask ourselves off, is
that the right answer, Pete,

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we've had this conversation many
times.

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We need liquidity in other
markets, in stable coins because

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you know, we don't.
We do.

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And otherwise, like I think
we'll come back to emerging

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markets, whatever about the use
case in emerging markets, which

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has another challenge.
If you're in euro zone or UK or

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Japan or other major economies,
they have functioning

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currencies, functioning payment
systems and those currencies

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need to be on chain as well.
So, yeah, and, and and we can't

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just, yeah, a lot of the
financial markets trade in

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dollars, but they don't all
trade in dollars.

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And my, our friend Dave Birch,
who was who was with us last

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week, he gave me the missing
piece of the puzzle.

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I think for me and to go from
emerging markets, right, and

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that the guys at Castle Island
Ventures wrote a very good

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report.
It was last year with Artemis

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and we covered this on on a
podcast episode in the past.

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And to say that listen, in
emerging markets, stable coins

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are working in the US dollar
stable coins.

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Obviously the majority of folks
in emerging markets that are

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using stable coins use Tether
and they're accessing that

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through finance primarily.
And the problems that stable

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coins are solving, U.S. dollar,
stable coins are solving in

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those emerging markets are that
people can't trust their banks,

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they can't trust the currency,
they can't trust the government.

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And so they prefer to live their
financial lives in U.S. dollar.

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Now, that is still a small drop
in the ocean in terms of global

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GDP and global value of assets,
but it's solving real problems.

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And the conclusion I came to
after reading that Castle Island

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Ventures report called emerging
markets or stable coins in

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emerging markets was that the
problems that stable coins are

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solving in emerging markets,
those problems don't exist in

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Europe.
And let's just take Europe,

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right?
But Dave Birch got me thinking

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about this.
If AI will become the dominant

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user of stable coins, which is
the expectation, and that there

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are other problems in the
Western world or in developed

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markets to solve.
People getting ripped off and

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insurance people having £292
billion in the UK for example,

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sitting in savings accounts
earning nothing.

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So your AI agent, your bot won't
stand for that.

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It will look to solve those
problems and try to get you some

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yield on your savings and try to
get you a better insurance deal.

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And stable coins are the only
way to do that efficiently

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because stable coins are
programmable and they don't wait

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for the banks to open on Monday
because you can near 24/7

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instant fast cheap settlement.
And AIAI won't stand for that.

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It won't wait.
It will just go.

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It will go.
And so in a roundabout way,

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we're coming back to if stable
coins are the dominant way that

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AI transacts and AI will
transact and 99% of them right

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now are in U.S. dollar are is
European economic sovereignty or

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currency sovereignty threatened
by people then using U.S. dollar

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through AIUS dollar stable
coins?

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That's I.
That's the question for me.

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Right, where we had it.
Yeah, I think there's there's

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two bits to unpack in what you
said there.

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The first one actually before we
come back to developing Mar

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developed markets like Europe or
UK is emerging markets.

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So one of the other interesting
things in the article was the

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risk that's being raised around
dollarization in emerging

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markets.
Like dollarization in emerging

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markets is not new, but there's
a piece here of do we

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fundamentally forever undermine
those countries ability to have

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their own economic sovereignty?
Because actually, yo, I think

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yes, there are countries where
you don't trust the currency,

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but actually do we end up in a
world where everybody outside

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the G7 or outside the big
currency blocks just uses

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dollars and their, and their
local and their local capital

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markets and their local central
banks just get completely

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decimated.
So obviously there are, I agree

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it's solving a real problem in
some of those markets, but it is

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also is it also just then
perpetuating and, and

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potentially A aspiring and
that's, that's one separate like

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that I hadn't thought of because
I'd be the same as you.

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I'd always go, this is working
in certain places where people

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want to hold U.S. dollars.
They need faster payments and

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even in the US where payments
are a bit slow, umm, but we

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don't have those with money
works in Europe.

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Now coming back to the coming
back to the the kind of

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development to Europe as an
example or Europe, particularly

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UK, it's same issue but probably
less amplified.

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Right now Europe is genuinely
worried about payment

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sovereignty, about payment
schemes.

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Let's ignore currency for a
minute.

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So if you know layer that you
lose the currency as well, like

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that's your that's just
somewhere I don't think Europe

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can go.
And therefore, and that was kind

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of rewinding back.
That means you need local

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domiciled tokenized money.
I and I and I want that, I, I

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want to see if your, I want to
see euro stable coin liquidity.

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I think that the one that circle
issued is at about 300 million

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right now compared to 300
billion in the US dollar

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denominated stable coins.
We need more.

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And I think, but I think it may
be a bit easier to get it going.

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We may, we may be obsessing up
there's only 300 million

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liquidity rather than looking at
is the is there sufficient

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liquidity to get in and out of
it?

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That's a really good point.
That's a really.

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Good point.
You know, how much liquidity do

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we need to actually, because
because we've got to create the

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flywheel, so you've got to
create the usage and we're in a

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bit of a chicken and egg.
People are saying, oh, there

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isn't enough liquidity so we
can't use it.

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Well, if you're not going to use
it, there won't be liquidity.

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So it's kind of how do we break
that chicken and egg?

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And obviously there's
interesting things the the

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separate to the article.
The really interesting one is

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the European banks getting
together to do a stable coin

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rather than a deposit toe.
Yeah.

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Whereas the UK banks have gone
down deposit token, deposit,

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tokenized deposits.
So it's kind of, I think we're

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still in that storming, norming
phase of where's this going to

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land.
I think it comes back to this

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that that we are still early
and, and I get so excited about

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these things, but if you have to
think back to 2021, we were at

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30 billion worth of stable coins
in the world and now we're at

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300 billion and it's still just
a drop in the bucket.

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And that Martin Wolf is
basically saying that stable

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coins will supercharge the
dollar.

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That'll weaken everyone else's
currency.

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It won't fix the Treasury
market.

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It could trigger massive capital
flight in emerging markets.

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It will constrain the Fed's
policy tools, expose the world

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to tethers, questionable
reserves and leaves Europe stuck

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somewhere between sovereignty
and competitiveness.

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OK, so it's still early, Martin.
That is my word to you.

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And and we've got to remember
here with the FT, you know, you

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got to love them.
They've been so anti crypto,

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anti stable coins for so many
years.

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So we're still early.
And you know, what I take from

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this is that it's not just some
domestic fintech.

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It is geopolitical battlegrounds
here that people are thinking

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about, but we've got to explore,
we've got to keep innovating,

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we've got to keep moving towards
just enabling people to live

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their financial lives and
businesses to transact business

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all over the world.
And financial institutions do so

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in a quicker, faster, better,
cheaper manner, right?

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Like that's.
What we're looking at and I

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think we've got to as innovators
also understand the other

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perspective of the central banks
and why this is geopolitical and

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why some of the things they do
in regulations or talk about

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where we might go, why are you
doing this?

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And you actually go, well,
actually they have something

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they're trying to protect as
well.

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And it's.
Yeah, it's it's like 1996 all

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over again with the Internet.
We got to get that right.

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And listen, Garrett, thank you
for unpacking this with me.

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Really appreciate it.
And what's the best way for

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people to find you?
Find me on LinkedIn is probably

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the best way you're Garrett
Cassidy on LinkedIn.

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You won't.
You won't be hard to find me and

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Pete, thank you very much for
having me on.

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Again, a privilege to be on the
first of the new format.

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Wonderful.
Thanks so much, Garrett.

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See you.