Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/340423 
Year of Publication: 
2023
Citation: 
[Journal:] Borsa İstanbul Review [ISSN:] 2214-8469 [Volume:] 23 [Issue:] 5 [Year:] 2023 [Pages:] 1152-1172
Publisher: 
Elsevier, Amsterdam
Abstract: 
Cryptocurrencies surged in popularity as an alternative medium of payment and security among both users and investors. However, the recent collapse of Bitcoin, Ether, and other traditional cryptocurrencies has raised concern about their capacity to function as a good store of value, investment, or hedge. Stablecoins, a kind of cryptocurrency that backed by physical or financial assets, have emerged as a potential solution. However, the latest failures of some algorithmic stablecoins and depegging of fiat-backed stablecoins have demonstrated that not all stablecoins can guarantee their stability. This study examines precious metal-backed stablecoins as a more stable alternative and attempts to identify the most suitable metal. We employed MGARCH-DCC, wavelet coherence, and simulation-based optimization techniques to explore the optimal precious metal for this purpose. Our findings indicate that a combination of gold and silver at a ratio of 88:12 is optimal. We offer critical policy implications and recommendations for various stakeholders.
Subjects: 
Crypto-assets
Precious metals
Stablecoins
JEL: 
C22
C54
E42
G15
O33
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
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