The question at the center of TechFlowPost’s feature is simple: when you hold one digital dollar, who actually owes it to you?
The article follows that question across 70 years of offshore dollar history, from the eurodollar market in London to today’s stablecoins and self-custody wallets. Its argument is that two migrations have unfolded in parallel. One concerns who carries dollar credit: New York banks, London banks, fintech databases, and now the reserves sitting behind stablecoin issuers. The other concerns the user’s relationship with the account itself, moving from full dependence on custodians toward direct control of assets through wallets.
The dollar’s move outside the United States
According to the article, the term eurodollar came from a bank’s telex address. About 70 years ago, the Soviet Union and Eastern European states, seeking to avoid the risk that dollar accounts inside the United States could be frozen, placed dollars with Banque Commerciale pour l’Europe du Nord in Paris and Moscow Narodny Bank in London. The Paris bank’s telex address was “Eurobank,” which gave the offshore dollar market its name.
Britain turned those deposits into a credit market. After the 1956 Suez crisis, the U.K. tightened foreign-exchange controls, and London banks began lending against offshore dollar deposits. In 1957, the Bank of England loosened policy further, helping London become the center of the eurodollar market.
The article says the market’s explosive growth was driven largely by the United States itself. Domestic deposit rates were too low to draw offshore dollars back home. During the oil shocks of the 1970s, dollar profits earned by oil exporters also stayed offshore in large part, landing in London and other offshore banks and pushing the market from a few million dollars to the trillion-dollar range.
Once a dollar deposit moved to London, the creditor changed. A New York bank no longer owed that money; a London bank did. The unit of account remained the same, but the institution standing behind it did not. London banks then discovered that they could do more than take dollar deposits. By extending dollar loans, they could create new dollar deposits on their own balance sheets.
Milton Friedman later described the source of eurodollars not as a printing press, but as “the pen of a bookkeeper.” In the article’s telling, that was the first large-scale proof that dollar liabilities did not have to be carried by banks inside the United States.
Regulation widened the opening. U.S. Regulation Q capped the interest banks could pay depositors, while London banks faced no such ceiling. Economic historian Catherine Schenk found in British archives that in June 1955, Midland Bank in London attracted about $49 million in 30-day dollar deposits in a single month because it could offer more attractive rates than U.S. competitors. After the 1957 sterling crisis, Britain barred domestic banks from using pounds to finance third-country trade, and London banks shifted more decisively into dollars. Companies and governments seeking funding increasingly went to London instead of New York.
The figures cited in the article map the scale of that shift. Around 1960, the eurodollar market stood at about $1 billion. A decade later, it was close to $50 billion. By 2007, offshore dollar deposits had reached about $8.9 trillion, more than 150% of deposits in U.S. domestic banks. Today, according to the Bank for International Settlements, dollar credit to non-bank borrowers outside the United States exceeds $14.3 trillion.
Yet the offshore dollar system carried a contradiction from the start. London banks could create dollar deposits, but they could not create Federal Reserve reserves. They could write “I owe you one dollar” on a ledger, but if those claims had to be converted into cash, or if market funding tightened, they still had to rely on U.S. correspondent banks and the U.S. settlement system. The article’s point is blunt: dollar credit left the U.S. banking system, but never left the U.S. settlement system.
Three crises and three layers of power
The article frames three episodes as moments that exposed the hidden hierarchy inside offshore dollars: the 1974 Herstatt failure, the 2008 dollar shortage, and the demise of LIBOR.
Herstatt and settlement power
On June 26, 1974, traders in New York were waiting for dollars from a foreign-exchange trade with Germany’s Herstatt Bank. Deutsche marks had already been delivered in Frankfurt. Because of the time difference, the dollar leg was due later in New York. Before that payment arrived, German regulators shut Herstatt down.
The counterparties in New York were left with no dollars and a clear lesson. A promise to pay is not the same as final settlement. Between a balance on paper and money that can actually be used sit counterparties, correspondents, time zones, and settlement systems. If one link fails, the claim does not turn automatically into spendable dollars.
The article notes that the event later helped give rise to the Basel Committee on Banking Supervision and left behind a term still used today: Herstatt risk. In its view, the episode showed that the power to issue a dollar payment promise is not the same as the power to complete settlement.
The 2008 crisis and last-resort dollar liquidity
In 2008, European banks held large amounts of dollar assets, including U.S. mortgage securities, corporate bonds, and other dollar-denominated paper. What they often lacked was a stable dollar deposit base. Instead, they relied on short-term funding from money market funds, commercial paper, and interbank borrowing.
That structure worked while refinancing channels stayed open. After Lehman Brothers failed, providers of short-term funding stopped rolling positions. Banks with trillion-dollar asset books suddenly struggled to raise the cash needed to meet maturing liabilities, producing a global dollar shortage.
The awkward question was who would provide dollars to banks outside the United States and outside the Fed’s supervisory perimeter. The answer, again, was the Federal Reserve. Through central bank swap lines, the Fed lent dollars to foreign central banks, which then supplied them to local banks. In December 2008, outstanding swaps climbed to about $583 billion, roughly one-quarter of the Fed’s balance sheet at the time. During the 2020 pandemic shock, the same framework was used again, with balances approaching $450 billion.
For the article, that was the clearest revelation of all. Offshore banks could create dollar deposits through lending, but they could not create the hard dollars needed for final settlement and debt repayment. When everyone wanted to exchange bank promises for the highest-grade form of dollar liquidity at once, only the Fed could backstop the system.
LIBOR and pricing power
London banks also held a third form of influence: pricing power. Their submitted funding costs evolved into LIBOR, the benchmark used to price loans, bonds, and derivatives around the world. At its peak, contracts linked to LIBOR ran into the quadrillions of dollars.
But the benchmark depended on self-reported bank submissions rather than completed market transactions. Once the manipulation scandal surfaced, that weakness was impossible to ignore. Barclays alone paid $450 million to U.S. and U.K. regulators for rigging submissions. Trust in LIBOR collapsed, and SOFR, based on actual repo transactions, replaced it. In June 2023, the U.S. dollar LIBOR panel permanently ceased publication.
The article argues that offshore banks gained the ability to expand dollar credit, but never secured ultimate control over the system’s foundations.
Fintech put the dollar account into a phone
The next stage came through fintech. Over the past decade and more, opening an account, exchanging currencies, and making cross-border transfers moved from branches and paperwork into mobile apps.
Revolut and Wise sit at the center of this section. Both let users hold multiple currencies, exchange money, transfer funds across borders, and spend via cards. To users, the experience can look almost identical. Legally, the balances are not the same thing.
Revolut took the route of becoming a bank. In 2018, it obtained a Lithuanian banking license, allowing it to provide banking services across multiple European countries. Eligible customer funds could then become actual bank deposits covered by local deposit insurance. In 2026, it also began moving U.K. users gradually into its British banking entity. The result, the article says, is that balances inside the same app can differ sharply by jurisdiction and legal entity. Some are protected bank deposits, some are e-money, and some are customer funds safeguarded with partner institutions.
Wise chose a different structure. The article describes it as more of an “electronic money machine,” one that does not generally transform user balances into bank deposits on its own balance sheet. A balance shown in Wise is an e-money claim that Wise promises to pay. The customer funds backing that claim must be kept separate from the company’s own money. If Wise were to fail, users should in principle have priority over those safeguarded assets, though whether they recover in full and how quickly depends on recordkeeping and the local insolvency process.
Those models differ in who stands behind the promise, how funds are stored, and what path users would take to recover money if the platform shut down. But they share one feature: the account record still sits in the institution’s own database. Users may tap a screen, but account opening, freezing, transfers, and withdrawals still depend on the institution’s system. What the user owns is a contractual claim, not direct control over the underlying funds.
Stablecoins moved transfer onto a public ledger
The article’s central claim about stablecoins is that their real break with earlier dollar forms lies not in risk-free money, but in a new way for a dollar promise to exist and move.
Banks and e-money firms keep records inside private ledgers. Users can view balances in an app, but transfers still depend on the operator’s internal system. Stablecoins package a redemption promise into a token that can be held and transferred directly on a public blockchain. What users hold is no longer just a database entry at one institution, but an asset that can move between wallets, exchanges, and onchain protocols.
The comparison with eurodollars is direct. Eurodollars moved dollar credit from New York’s ledgers to London’s. Stablecoins go one step farther by moving dollar balances out of any single institution’s ledger and onto a public ledger that no single party owns outright.
The article is careful on where the novelty ends. Stablecoins split “one dollar” into two functions: redemption and transfer. Redemption is not new. Issuers back their promises with reserve assets, mainly U.S. Treasuries and bank deposits, custodied in traditional financial institutions, and final redemption still runs through traditional channels. Transfer is the genuinely new layer. For the first time, dollar balances can change hands directly on a public ledger without passing through a single institution’s internal books.
In that sense, the article says, stablecoins are not dollars without banks. They are dollars in which redemption remains tied to traditional finance while transfer has moved onto a public blockchain.
The same force that once pushed eurodollars is now pushing stablecoins: global demand for dollars exceeds the low-cost reach of traditional banks. People in high-inflation countries want to preserve purchasing power. Businesses engaged in cross-border trade need to settle invoices. Workers abroad need to send money home. The issue is often not the complete absence of dollar access, but the barriers of FX controls, account-opening thresholds, high fees, and slow review processes. When traditional finance cannot meet that demand, demand looks for a different outlet. In the 1950s, that outlet was London banks. Today, the article argues, it is stablecoins on borderless public ledgers.
Still, stablecoins inherit the same duality that defined eurodollars. They circulate globally, but they remain tied back to the U.S. financial system. The largest reserve components are U.S. Treasuries and bank deposits. Tokens can move across blockchains worldwide, but reserve custody, asset management, and ultimate redemption still depend on traditional financial infrastructure. Seen from that angle, the article says, stablecoins have not weakened the dollar system. They have built a larger global distribution network for U.S. Treasuries and dollar assets.
The scale is no longer marginal. As of July 2026, the total stablecoin market capitalization stood at about $312 billion. Onchain settlement volume in 2025 reached about $33 trillion. Tether, the largest issuer, had about $141 billion in U.S. Treasury exposure, a level the article says would place it near the top 20 sovereign holders of Treasuries if compared with nation-states.
The article also stresses that stablecoins are not just a digital replay of eurodollars. Eurodollars grew through bank deposit-taking and lending, expanding balance sheets while banks absorbed credit and maturity risk. Mainstream stablecoins look more like wrappers around existing dollar assets, redistributed with redemption supported by reserves such as cash and short-dated Treasuries. The transfer mechanism is different too. Eurodollars move through correspondents and settlement networks; stablecoins can settle directly onchain. In the past, accessing offshore dollars generally required a bank account. Now, an onchain address can be enough.
That is why regulation is catching up. The article points to legislative moves in the European Union, Hong Kong, and the United States that set rules on who may issue stablecoins, what reserves must be held, and whether users can redeem at will. It singles out the U.S. GENIUS Act of 2025, which wrote a bankruptcy priority into law: if a compliant issuer fails, stablecoin holders stand first in line against reserve assets. The article treats that as a sign that this newer form of the dollar is entering a more formal stage.
Self-custody wallets change who controls movement
The final section turns to self-custody wallets. The article argues that banks, e-money firms, and custodial platforms all share the same basic structure. Users hand over assets first, and the institution records a balance inside its own system.
Self-custody wallets, represented in the article by Bitget Wallet, work differently. They do not take deposits, do not create platform balances on an internal ledger, and do not owe users any stablecoins. Asset records remain onchain, and moving those assets requires a private-key signature. The wallet provides address generation, key management, transaction signing, onchain connectivity, and access to financial services, but it is not the creditor holding the assets on the user’s behalf.
That changes the order in which financial services are organized. In the old model, a user had to become a customer of an institution and place money into an account the institution controlled before gaining access to payments, trading, or wealth products. In the self-custody model, the user can first hold and control onchain assets, then connect those assets to services through a wallet. The address is not bound to a single wallet company. As long as the private key remains available, another wallet app can access the same address.
The article separates two functions clearly. Stablecoin issuers answer the question of who ultimately redeems the dollar claim. Self-custody wallets answer the question of who can move the asset. Reserve sufficiency, redemption capacity, and legal recognition still depend on the issuer and legal structure. The wallet addresses a different layer of risk: whether users must give up control of assets to a platform in order to use financial services.
That, in the article’s view, is the deepest break from past financial accounts. Financial services and asset custody are separated for the first time. Payments, trading, yield, and asset management can be gathered in one interface, while transfer control no longer has to be handed over to the platform. The redemption obligation behind the dollar remains with the issuer, but control over movement can stay with the user.
Where the two migrations meet
The article closes by returning to its original question. Over seven decades, the dollar moved from New York ledgers to London, then into fintech databases, and now onto public ledgers in the form of stablecoins. The ledgers changed. The institutions changed. The promise behind the dollar did not disappear.
What changed at the latest stage is the final step in control. Once stablecoins enter self-custody wallets, users still need to trust issuers to honor redemption. But they no longer have to hand those assets to another platform for safekeeping. The credit relationship remains. Control, for the first time in this chain, can stay with the holder.
