Another characteristic of the modern US monetary system is its high degree of digitization. Of the approximately $21 trillion in broad money (M2), approximately $18.5 trillion (nearly 90%) is composed of digital ledger entries from commercial banks or the Federal Reserve’s reserve database. The physical currency in circulation is only $2.36 trillion, and the Federal Reserve estimates that about 60% (especially the $100 banknote) is held overseas as a portable store of value. Despite currency digitization, most retail payments in the United States still rely on traditional infrastructure such as ACH systems from half a century ago, with transfers typically settling the next day or longer.
In short, today’s US dollar is mainly in digital form, officially unified, based on legal tender, coveted globally, but its payment network is only partially modernized, and the size of the federal balance sheet and its future affordability have become key long-term issues for the system.
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Overview of stablecoins
Stablecoins represent the next stage of evolution in currency and payment systems, laying the foundation for the financial system with faster settlement speeds, lower fees, seamless cross-border functionality, native programmability, and powerful audit tracking capabilities. They essentially encapsulate the dollar in software, enabling it to move at the speed of light anywhere covered by the Internet. Simply put, stablecoins are the fastest form of existence for the US dollar.