Hard Peg
An exchange-rate commitment backed by a strong, generally legally or structurally enforced guarantee of maintaining a fixed rate.
A hard peg is an exchange-rate commitment backed by a strong, generally legally or structurally enforced guarantee of maintaining a fixed rate — the traditional example being a national currency's central bank legally committing to convert its currency at a fixed rate against another, backed by sufficient reserves and legal authority to enforce it.
Few, if any, crypto stablecoins genuinely operate with a true hard peg in this strict sense — most operate with a soft peg (see Kaavon's "Soft Peg" glossary definition) instead, since they generally lack the legal enforcement authority and structural backing a true hard peg requires.
Examples
- A national currency board's legally enforced, fixed exchange rate against a reference currency is a classic example of a true hard peg.
- Few, if any, crypto stablecoins genuinely operate with a true hard peg, since they generally lack the legal enforcement authority a hard peg requires.