Abstract: This paper studies the international macro-financial implications of U.S. dollar-backed payment stablecoins. We show that these digital assets create a new global safe asset channel linking private money creation and global payment demand directly to U.S. public debt. By reshaping the demand for safe assets and the geography of dollar intermediation, stablecoins alter monetary transmission and international spillovers. Although they widen the dollar’s global footprint and compress U.S. risk-free yields, they generate non-trivial macro-financial costs. Stablecoins amplify the pass-through of U.S. monetary policy to Treasury yields while dampening its real effects, and increase both U.S. and foreign exposure to cross-country shocks. These effects are limited at low adoption levels but rise non-linearly with stablecoin capitalization, tightening the fiscal–monetary nexus and reshaping the functioning of the international financial system.

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