> ## Content Index > Fetch the complete content index at: https://www.dailyferment.com/llms.txt > Use this file to discover other available public pages before exploring further. # Singapore says a stablecoin's par is not a given. New England made it one in 1825. - URL: https://www.dailyferment.com/stablecoin-par-value-mas-suffolk-system/ - Published: 2026-10-12T16:00:00.000Z - Updated: 2026-10-12T15:59:59.000Z - Description: MAS's managing director says par value is not a given for stablecoins. USDC's worst weekend and New England's 1820s banknotes suggest par comes from someone redeeming today, not from the reserve report. - Author: Rana Bilal Zafar - Tags: Working Out Loud, Fintech, Business, #reframe On 9 October Chia Der Jiun, managing director of the Monetary Authority of Singapore, gave a keynote at INSEAD on digital finance. The paragraph that matters for anyone holding a stablecoin is short. A bank deposit keeps its value, he said, "because it can be exchanged at par for central bank reserve money. This is not a given for stablecoins. Confidence in their ability to maintain par value must instead be achieved primarily through transparency and adequacy of reserve assets." He added: "There may be limits to their suitability for settling large wholesale transactions." That's a central banker saying, politely, that a dollar stablecoin is not quite a dollar. He also mentioned "discussions and proposals" for giving any future systemically important stablecoins access to central bank reserves. MAS's own rules, now in consultation, require reserve backing, capital, redemption at par and disclosure. The question I want to answer: is reserve quality really what keeps a private dollar at one dollar? ## My first reaction was yes, it's all about the reserves If every coin is backed by a dollar of Treasury bills, and you can see the bills, the coin is worth a dollar. That's the whole pitch, and it's why MAS's framework starts with reserves and disclosure. Then I looked again at the worst weekend USDC has had. ## What happened to USDC in March 2023 On Friday 10 March 2023 Silicon Valley Bank failed. Circle said $3.3 billion of USDC's roughly $40 billion in reserves was at SVB. By Saturday USDC was trading around $0.88, and Cointelegraph reported a low of $0.87 over the weekend. The arithmetic doesn't explain that. Even if every dollar at SVB had been lost, the remaining reserves covered about 92 cents per coin, and on Sunday Circle's chief executive, Jeremy Allaire, said "100% of USDC reserves are also safe and secure." What the market priced was something else: it was a weekend, banks were shut, and Signature Bank, which Circle used for minting and redemption, failed on Sunday. You couldn't hand USDC back and get dollars. He also said "liquidity operations for USDC will resume at banking open tomorrow morning". Once the US government and the Fed announced support and redemption opened again, the coin went back to about $0.99. So the discount opened when redemption closed, more than when reserves were found short. ## The cross: how New England's banknotes got to par Before the Civil War, American banks issued their own paper money. A note from a country bank was a promise to pay coin at that bank. In Boston, far from the issuer, it traded at a discount. An essay on the University of Groningen's American history site puts the usual range at one to five percent. Rolnick, Smith and Weber, writing for the Minneapolis Fed, cite a discount of about 3 percent on country notes in Boston before the Suffolk system. ![Diagram: left, USDC in March 2023 falls from $1.00 on Friday to a low of $0.87 over the weekend while banks were shut and redemption closed, then returns near $1 on Monday when redemption reopens. Right, New England country banknotes traded at about a 3% discount in Boston before the Suffolk system and at par under Suffolk clearing, 1825 to 1858](https://storage.ghost.io/c/d7/b7/d7b77195-48c5-45ab-8688-51750879d1d6/content/images/2026/10/df43-par.png) The discount tracks access to redemption. Sources: MAS, 9 Oct 2026; CNN and Cointelegraph, Mar 2023; Rolnick, Smith and Weber, FRB Minneapolis, 1998. The country banks weren't necessarily badly backed. The problem was distance from redemption. What fixed it wasn't a disclosure rule. It was the Suffolk Bank in Boston, from the mid-1820s to 1858\. Member banks kept an interest-free deposit at Suffolk, and Suffolk accepted their notes at par and cleared them. Banks that wouldn't join found their notes collected and presented in bulk for redemption in coin, which is a strong reason to join. By 1825 most New England banks were in. Calomiris and Kahn, comparing New England with the Mid-Atlantic states, found New England banks issued more notes at uniform, low discount rates. Rolnick, Smith and Weber's reading is that note clearing tends toward a natural monopoly. Par in New England was produced by a place that would take the note at par today, backed by a deposit it already held, and that would send the note home if it doubted it. ## What that suggests for stablecoins Chia's framing puts reserves and transparency first. The Suffolk history and the USDC weekend both point to something a reserve report can't show: whether someone will give you a dollar for the coin right now, at the size you need, on the day you need it. That's also what his own deposit comparison says, if you read it closely. Deposits hold par because they can be exchanged for central bank money. That's a redemption channel, not a reserve report. The "access to central bank reserves" idea he mentioned is the Suffolk answer in modern form: a clearer at the centre that will take the coin at par because it already holds the issuer's money. It also explains his doubt about wholesale settlement. A retail payment of fifty dollars rarely tests redemption. A bank settling a large trade on a Saturday tests exactly that. I wrote earlier about [Stripe making OUSD a default](https://www.dailyferment.com/ousd-stripe-default-stablecoin-reserve-yield/), which is a question about who earns on the reserves. This is the other half: who stands ready to redeem. And Chia made a point in the same speech that connects to [agents moving deposits for small rate differences](https://www.dailyferment.com/ai-agents-bank-deposits-loyalty-penalty/): customer agents "could mean that money will move around faster for smaller differences in benefits and incentives". Faster money tests redemption more often. ## Where the comparison breaks Suffolk cleared paper notes inside one region. Stablecoins move across the world in seconds, and the redemption desk is one issuer with banking partners in one country. There's no Suffolk for that yet. A clearer powerful enough to make everyone's money trade at par is also powerful enough to abuse it. Historians have argued over whether Suffolk was a stabiliser or a way for Boston banks to extract rents; Calomiris and Kahn found little sign of the second, but the worry is the right one to carry forward. Gorton and Zhang made the larger argument years ago, that stablecoins look like 19th century private banknotes; I'm only taking one piece of that history, the piece where par was manufactured. ## What I'm confident of, and what I'm not What Chia said is established from the MAS transcript. The USDC figures are established from CNN and Cointelegraph reports at the time. The Suffolk history is established from Rolnick, Smith and Weber, and from Calomiris and Kahn. That redemption access matters more than reserve disclosure for the day-to-day price is my inference from those two episodes. How far a Suffolk-style clearer could work for global stablecoins is a guess. The claim, in one sentence: reserves tell you a coin should be worth a dollar, but what made private money trade at par in 1820s New England was a clearer that accepted it at par every day and sent it home for redemption, so a stablecoin holds par where someone will redeem it today, not where the reserve report is best. ## Sources Chia Der Jiun, "Building Trusted Foundations for Digital Finance", keynote at the INSEAD Digital Finance and Agentic AI Summit, Monetary Authority of Singapore, 9 October 2026\. [https://www.mas.gov.sg/news/speeches/2026/building-trusted-foundations-for-digital-finance](https://www.mas.gov.sg/news/speeches/2026/building-trusted-foundations-for-digital-finance?ref=dailyferment.com) Blockhead, "MAS Chief Says Stablecoins May Not Be Fit for Large Wholesale Settlement", 12 October 2026\. [https://blockhead.co/2026/10/12/mas-chief-says-stablecoins-may-not-be-fit-for-large-wholesale-settlement](https://blockhead.co/2026/10/12/mas-chief-says-stablecoins-may-not-be-fit-for-large-wholesale-settlement?ref=dailyferment.com) CNN, report on USDC breaking its dollar peg after Circle disclosed $3.3 billion at SVB, via ABC17, 11 March 2023\. [https://abc17news.com/money/cnn-business-consumer/2023/03/11/stablecoin-usdc-breaks-dollar-peg-after-revealing-3-3-billion-silicon-valley-bank-exposure/](https://abc17news.com/money/cnn-business-consumer/2023/03/11/stablecoin-usdc-breaks-dollar-peg-after-revealing-3-3-billion-silicon-valley-bank-exposure/?ref=dailyferment.com) Brian Quarmby, Cointelegraph, "USDC bounces back towards $1 peg after Fed announcement", 13 March 2023\. [https://cointelegraph.com/news/usdc-bounces-back-towards-1-peg-after-fed-announcement](https://cointelegraph.com/news/usdc-bounces-back-towards-1-peg-after-fed-announcement?ref=dailyferment.com) Arthur J. Rolnick, Bruce D. Smith and Warren E. Weber, "Lessons From a Laissez-Faire Payments System: The Suffolk Banking System (1825-58)", Federal Reserve Bank of Minneapolis Quarterly Review, Summer 1998\. [https://www.minneapolisfed.org/research/qr/qr2232.pdf](https://www.minneapolisfed.org/research/qr/qr2232.pdf?ref=dailyferment.com) Charles W. Calomiris and Charles M. Kahn, "The Efficiency of Self-Regulated Payments Systems: Learning From the Suffolk System", NBER Working Paper 5442, 1996\. [https://www.nber.org/papers/w5442](https://www.nber.org/papers/w5442?ref=dailyferment.com) "State and Private Attempts at Reform", from A Brief History of Central Banking in the United States, University of Groningen American history site. [https://www.let.rug.nl/usa/essays/general/a-brief-history-of-central-banking/state-and-private-attempts-at-reform.php](https://www.let.rug.nl/usa/essays/general/a-brief-history-of-central-banking/state-and-private-attempts-at-reform.php?ref=dailyferment.com) Gary B. Gorton and Jeffery Y. Zhang, "Taming Wildcat Stablecoins", University of Chicago Law Review 90:3, 2023\. [https://chicagounbound.uchicago.edu/uclrev/vol90/iss3/3](https://chicagounbound.uchicago.edu/uclrev/vol90/iss3/3?ref=dailyferment.com)