In 1982 E. Gerald Corrigan, then president of the Federal Reserve Bank of Minneapolis, asked “Are Banks Special?” [1] He did so at the behest of Paul Volcker when Volcker was chairman of the Federal Reserve Board and at a time when there was “rapid change, with market innovation and new sources of competition” to banks from nonbanks and the “perception that banks’ competitive position—and presumably their market share—has slipped”. [2] Corrigan’s paper provided an approach to think about the future scope of banking activities and bank structure that, in hindsight, appears to have predicted largely how banking law would evolve for at least the next 20 years after his writing. [3]

At a time when we once again see a rapid pace of innovation in the financial sector and banks are facing increased competition from new nonbank innovators, we thought it appropriate to turn back to Corrigan’s perceptive and influential work to see what lessons it can offer. As described below, his analysis provides yet another lens through which to view the stablecoin debate. Moreover, his struggles with how to consider money market mutual funds (“MMFs”) helps inform the debate, given not only that MMFs and stablecoins have similarities, but also that MMFs were, at the time of the essay (as stablecoins are now), relatively small, new and novel financial products.

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