DW -- The strange nexus of crypto-politics and international money markets

This one was deeply personal. As a synthesis of nearly ten years of work, this piece was an attempt to explain what I think is the most pressing political issue in financial markets right now. But in hindsight, it was much more: This story became my personal tribute to my most important intellectual influence - Perry Mehrling, who about a year after we met him for this story tragically passed away in October 2026. I am writing this a about a year after publication because life was just so incredibly dense. But with Perry’s way too early passing, I realized why this story was so personal.

I read Perry’s writing for the first time for a workshop in Berlin in the summer of 2016. For the first time, the world seemed to make sense. There was clear structure to how the economic world was structured – around money, around making payments and the mechanisms to do so. Perry influenced many of us through his highly successful online course on money and banking. His thinking is what guides my understanding of the highly interconnected economic world today, seeing it through an interlocking web of financial claims that neccessarily and almost always transcend borders. But with his passing I realised his teaching and thinking did two more things for me: Watching him teach helped me understand how we have to explain economics to outsiders, we have to use it as a tool to explain the world, not to abstract away into a world that ordinary people don’t know. And Perry brought many of us together. I am very lucky to have found friends through his work – friends who I’ve debated monetary theory with intensely over time. Realizing this with his death made me understand just how outstanding an intellectual influence he has been to me.

When we set out to do this story for DW on the politics of crypto and stablecoins in the US, Perry was my obvious choice to speak to. I am forever thankful to have visited his office in Boston for this, to have talked to him for this – I hope this will provide some closure for the grief. It was rainy and ugly the day we showed up at Perry’s office – and then we had to go on a hunt for a blackbord for him to draw some balance sheets on. I left tired but happy.

The story: The crypto-politics nexus

After years of talk of cryptocurrencies, the Trump administration finally politically embraced the sector full on. In this story we took a historical view towards what money is, how it developed and how the public seems to be on the hook for money to actually work.

Central to this story is the embrace of stablecoins – a form of crypto assets that the Trump administration aims to use to strengthen the role of the US dollar globally.

Stablecoins »claim« a stable peg to a currency. Empirically the verdict isn’t great. And even theoretically it’s just really a hard ask to keep stablecoins actually stable. Because stablecoin issuers so far have no access to emergency lending at the central bank.

The coins are digital assets, usually stored on some kind of blockchain infrastructure. They claim to keep a 1:1 peg to an (technically any) underlying asset. However, the vast majority of stablecoins in circulation at the time of writing are pegged to the US Dollar: One stablecoin is said to be always redeemable for one US Dollar.

Stablecoins create a ramp between the spekulative crypto assets and »the real world of currencies«. And with currencies in smaller economies in disarray, stablecoins offer low-barrier entry to holding assets that are US Dollar-like. Their usage has grown massively globally.

In a world, where communication is increasingly digitized and standardized, cutting the transactional banker is likely to happen in the future. Stablecoins do that.

But there is precedent that private innovations around means to settle payments – especially internationally – come with questions: Like, what happens if there is a problem of trust in the system? Domestic financial markets solved that question over time through central banks. But international markets only recently solved this issue.

An issue, that is weirdly personal to me.

https://www.youtube.com/watch?v=gkmHQCktvGg

This post was updated in October 2026 to reflect Perry Mehrling’s passing.