Nellie Liang on Stablecoins After GENIUS, Private Money, and the Global Dollar

David Beckworth (0:02)

Welcome to Macro Musings, where each week we pull back the curtain and take a closer look at the most important macroeconomic issues of the past, present and future. I am your host, David Beckworth, a senior research fellow with the Mercatus Center at George Mason University. I'm glad you decided to join us.

Our guest today is Nellie Liang. Nellie is a former Treasury and Federal Reserve official. She joins us today to discuss the future stable coins after genius, what it means for private money, for public debt, and the future of the global dollar. Nellie, welcome to the podcast.

Nellie Liang (0:43)

Thank you, David, for having me.

David Beckworth (0:44)

It's great to have you on. This is long overdue. I've been following your work for some time. I've had some of your colleagues from Brookings. I've had some of your former Treasury colleagues as well on the show.

It's great to get you on here. You've done a lot of interesting work on Treasury markets in the past, as well as what we're going to talk about today, which is stable coins. You have a new paper titled Stable Coins After Genius, Private Money, Public Debt and the Global Dollar. And it is out on the Aspen website. And we'll provide a link to it in the transcript. But welcome to the show and thank you for joining us to discuss this. And as we get into this, maybe tell us a little bit about yourself and your career.

Nellie Liang (1:23)

Okay. Well, again, thank you for having me. It's fun to be here and looking forward to the conversation.

So I started my career, as you mentioned, at the Federal Reserve Board. I was there for a little over 30 years. My last few years, I spent as the director of a new division called the Division of Financial Stability, which was created after the global financial crisis. And the chairman then, Bernanke, very much wanted a restructuring of the Federal Reserve to focus not just on how the Fed responds to crises using its liquidity management tools, but to also be thinking about how should the possibility of crises factor into monetary policy or financial regulatory policy. So that was a challenge and just a very exciting time to be at the Federal Reserve. I was very fortunate to have so many great colleagues at the Fed.

I left there though after 30 years, went to Brookings. Then shortly, several years later, I joined the Treasury. Janet Yellen was asked to be Secretary of the Treasury. I had worked with her at the board for quite a while. So she had asked if I could take on being the Undersecretary for Domestic Finance, which had many of the same financial stability issues, but a much broader remit and a much broader set of tools and policy objectives. So that was a fascinating time. So I've just, again, been very fortunate to have been able to work with so many extraordinary people, including so many dedicated public servants. It's been-

David Beckworth (3:12)

Yeah, you've run an amazing circle. I mean, Ben Bernanke is your boss, Jenny Allen is your boss.

Nellie Liang (3:17)

I've had great bosses and also just great colleagues.

David Beckworth (3:20)

Yeah.

You've seen it from both the Fed side, 30 years, well, that's an amazing career. Then on the side of the US Department of Treasury, so you've seen a little more politics on that side, and then the Fed, more of a technocratic perspective. It's still such a rich experience. Now you're at Brookings, you also understand, you participate in your role on the Financial Stability Advisory Council, and you're a visiting scholar at the Federal Reserve Bank of Chicago, so you're staying busy, it sounds like.

Nellie Liang (3:47)

Yes, I'm staying very busy. Yeah.

David Beckworth (3:49)

In fact, this paper we're going to discuss today is part of your staying busy, right? You presented it at the Aspen Institute.

Nellie Liang (3:54)

Yes. We were asked this paper was a paper written for the most recent Aspen Economic Strategy Group Conference, and there was a discussion of the dollar, the deficit, private debt, digital assets and its role. So this was a paper to provide some background on potential role of stable coins as a payment instrument, as private money, how it could affect treasury financing, and the role of the dollar. Yeah.

David Beckworth (4:25)

Well, thank you for doing it because we get a chance to discuss it. It gives me excuse to read another great paper on stable coins as I learn more. Now, you have a co-author, Brent Neiman, is that right?

Nellie Liang (4:33)

Yes, that's right. He is current... He's at the University of Chicago Booth School.