Payment stablecoins are set to become an important financial instrument. Their impact on the financial system will depend on whether the issuers can purchase assets (i) only with bank deposits or (ii) also by issuing liabilities widely accepted as means of payment. In this second case, stablecoin issuers would be sharing banks’ ‘exorbitant privilege’ of creating money ‘out of thin air’. In examining the two scenarios, this column embeds stablecoins in key mechanisms of money creation, considers