Ruth Judson

“So the interesting thing about the COVID episode was that in the very short run, so, like, say, the first three months, about a third of the demand was foreign. About a third was domestic, and about a third was just banks loading up their vaults to the ceiling. And to me, that was entirely understandable. Right? I mean, we really had no idea. And certainly, if you were trying to fill ATMs, you had no idea whether if you were a bank, you didn't want your ATMs to run dry.”

“Yeah. And so part of the enabling legislation was that we had to write a report. So there are actually three reports from the treasury called the use and counterfeiting of of United States currency abroad. I mean, what I like to say is as much as two thirds or between half and two thirds. Yeah. Because we really don't know. It's exceptionally hard to measure.”

“So we had part of the legislation required that we produce estimates of counterfeits, and and so I did. And those estimates were in the reports, and the Secret Service cited them for years. And when I was on my rotation in cash, I said, you know, you've been citing these numbers that are from 2005. Maybe we should update them because they will be lower. I promise you. And sure enough, they were lower by, like, a factor of 10.”

“So I know I think people would be very uncomfortable with that. I think that in the case of Sweden, they actually have offline capability for their payment system. But they are very concerned about the inclusion effects of older people or people in remote locations, and, you know, the bank doesn't have cash anymore. And I think that's a problem we wanna avoid. And I I think there is a a fundamental privacy consideration too.”

“And I was introduced to cash at that point because, true story, they had just started this project, and they needed somebody. They needed an economist to go to Belarus in December. And I was not yet at the Fed. And one of my colleagues and MIT classmates said, well, how about that woman who's coming soon? She said she likes to travel, and she speaks Russian. She can go to Minsk in December. And there you have it.”

“So I think one thing that is surprising to me is the extent to which dollar denominated stablecoins so completely dominate the market. I mean, it's like 90%, 95%, 99%. It's incredibly high. And I don't understand why that would necessarily be the case, but here we are. So, I mean, anytime there's a dollar denominated asset that's being popularized, it's going to, I would say, increase the standing of the dollar.”

“So Tether seems to be and stablecoins in general seem to be, yeah, a way to execute payments across borders. So people working as translators for somebody in another country, they get paid in stablecoins or the stablecoins of the vehicle. So they do seem to be sort of like cash, but more mobile.”

“So the way the TIC data collection system works, we only or we, as with the authority delegated to us from the treasury, can only collect from US entities. So we will collect data from US custodians, and they will say, yes. You know, we have we're holding securities in custody for entity x in Belgium or whatever. But they can't go any further than that. So the classic example we use here is that Euroclear is a huge securities depository in Belgium, and they hold all types of securities, but in particular, treasuries on behalf of many customers from many countries. But all we see in the TIC data is Belgium.”

“And, I mean, I have a little bit of a side hobby because an empirical regularity is that if I'm talking to somebody about, oh, you work at the Fed. What do you do? I almost always tell them I work on cash because nobody wants to hear about the other stuff. Let's face it. Nearly every time I start talking about cash, they will tell me a story about their mother, their brother, their whoever who's got a shoebox full of cash.”