Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of November 21) includes Holdings information from 60 money funds (down 2 from a week ago), or $3.846 trillion (down from $4.029 trillion) of the $7.911 trillion in total money fund assets (or 48.6%) tracked by Crane Data. (Note: Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here and our November 13 News, "Nov. Money Fund Portfolio Holdings: Treasuries Jump; Repo Inches Down.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.892 trillion (down from $1.978 trillion a week ago), or 49.2%; Repurchase Agreements (Repo) totaling $1.267 trillion (down from $1.409 trillion a week ago), or 32.9%, and Government Agency securities totaling $327.9 billion (down from $353.9 billion a week ago), or 8.5%. Commercial Paper (CP) totaled $173.4 billion (up from $134.6 billion a week ago), or 4.5%. Certificates of Deposit (CDs) totaled $85.8 billion (up from $72.4 billion a week ago), or 2.2%. The Other category accounted for $49.2 billion or 1.3%, while VRDNs accounted for $52.0 billion or 1.4%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.892 trillion, Fixed Income Clearing Corp with $501.4B, the Federal Home Loan Bank with $203.3B, JP Morgan with $109.4B, RBC with $90.9B, Federal Farm Credit Bank with $76.0B, Wells Fargo with $70.3B, BNP Paribas with $66.5B, Citi with $58.3B and Barclays PLC with $47.4B.
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($317.9B), JPMorgan 100% US Treas MMkt ($281.8B), Fidelity Inv MM: Govt Port ($266.9B), State Street Inst US Govt ($195.7B), BlackRock Lq FedFund ($191.0B), Morgan Stanley Inst Liq Govt ($185.7B), Federated Hermes Govt ObI ($175.1B), Fidelity Inv MM: MM Port ($169.5B), BlackRock Lq Treas Tr ($167.3B) and Dreyfus Govt Cash Mgmt ($165.7B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
In other news, the European Central Bank (ECB) recently published a piece titled, "Stablecoins on the rise: still small in the euro area, but spillover risks loom." It states, "Stablecoins have captured widespread attention in recent months on account of their rapid growth, raising potential concerns for financial stability. Stablecoins are experiencing rapid growth, pushing their market capitalization to new all-time highs. From a financial stability perspective, this may raise concerns arising from certain structural weaknesses inherent to stablecoins and their interconnectedness with traditional finance. This box explores the key risks and vulnerabilities associated with stablecoins, such as de-pegging and runs. It explains the most important use cases for stablecoins and how risks could evolve if this market were to experience further significant growth. Finally, the box reflects on global regulatory developments and how the risks posed by cross-border regulatory arbitrage could be mitigated."
It continues, "Fueled by broadening investor interest and global regulatory developments, the combined market capitalization of all stablecoins has reached an all-time high. It now exceeds USD 280 billion, accounting for roughly 8% of the total crypto-asset market.... Two US dollar-denominated stablecoins dominate the market, with Tether (USDT) and USD Coin (USDC) accounting for USD 184 billion (63%) and USD 75 billion (26%) of stablecoin market capitalisation respectively. While US dollar-denominated stablecoins make up around 99% of all stablecoin supply in circulation, euro-denominated stablecoins play a minor role, totaling only around €395 million <b:>`_."
The ECB says, "Recent regulatory clarity may have been a driver of the soaring demand for stablecoins. The EU has taken significant steps to regulate crypto-assets through the full implementation of its Markets in Crypto-Assets Regulation (MiCAR) last year, providing clear rules for stablecoin issuers and those offering stablecoin-related services. The United States has recently followed suit with the passage of its Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), thereby offering some regulatory clarity for stablecoin issuers. Other jurisdictions, such as Hong Kong, have also introduced legislation to regulate stablecoins."
They tell us, "At present, crypto trading constitutes by far the most important use case for stablecoins. Stablecoins are used as an easy way in and out of the crypto ecosystem while eliminating the need for traders to repeatedly convert back to fiat currencies. Stablecoins like USDT and USDC are now the preferred units for trading on crypto trading platforms. Around 80% of all trades executed globally on centralised crypto trading platforms involve stablecoins, which shows that stablecoins have become essential for the functioning of the crypto-asset ecosystem. Other use cases for stablecoins do exist but play only a minor role."
The piece states, "Cross-border payments are a frequently cited use case, as crypto-assets flow easily across borders. Although research suggests that over 70% of stablecoin flows are cross-regional there is, however, a lack of concrete evidence that stablecoins are used systematically for remittances and other cross-border transactions. In addition, it has been claimed that stablecoins are used as a store of value in emerging markets and developing economies, especially in countries facing high inflation."
It adds, "However, the available data indicate that the retail use of stablecoins represents a tiny share of total stablecoin volumes. It is estimated that only around 0.5% of volumes are organic retail-sized transfers. In conclusion, the use of stablecoins seems to be primarily driven by their role within the crypto-asset ecosystem, and it remains to be seen whether stablecoins will be adopted widely across other use cases."
They state, "Stablecoins may pose financial stability risks through their inherent vulnerabilities and their interconnectedness with traditional finance. Stablecoins' primary vulnerability is that investors lose confidence that they can be redeemed at par. This loss of faith can simultaneously trigger a run on a stablecoin and cause a de-pegging event. Given the importance of stablecoins in the crypto ecosystem, a large adverse stablecoin shock would be detrimental for crypto markets."
The update comments on "USDT and USDC," "As the two largest stablecoins, they now rank among the largest holders of US Treasury bills and have asset reserves that are comparable to the top 20 largest money market funds. Moreover, they have been among the largest net acquirers of short-term US Treasuries in recent months.... A run on these stablecoins could trigger a fire sale of their reserve assets, which could affect the functioning of US Treasury markets. This could pose a significant risk if stablecoins, and their corresponding asset reserves, continue to grow rapidly, with some projections suggesting that market capitalisation could reach USD 2 trillion by 2028.... [T]he failure of just one entity could have a widespread impact, even in the absence of a systemic stablecoin crisis."
Finally, it says, "Significant growth in stablecoins could cause retail deposit outflows, diminishing an important source of funding for banks and leaving them with more volatile funding overall. If stablecoins are adopted widely, households may replace some of their bank deposits with stablecoin holdings. These outflows could be amplified if crypto-asset service providers, such as crypto trading platforms, were allowed to pay interest on stablecoin holdings.... In Europe, however, MiCAR prohibits the payment of interest on stablecoin holdings by stablecoin issuers and crypto-asset service providers, with banks calling for similar bans in the United States."
