- The IMF said dollar stablecoins can expand access to foreign currencies and effectively serve as an alternative foreign-exchange market.
- The report said stablecoin prices could reflect real-time dollar demand during a currency crisis, accelerating sales of local currencies and a shift into dollar assets.
- The report said stablecoins such as Tether (USDT) are being used as an unofficial foreign-exchange market in some countries, and proposed that regulators consider steps such as limiting large transactions during crises.
Forecast Trend Report by Period
Dollar-based stablecoins, digital assets pegged to fiat currencies, can improve access to foreign exchange but may also accelerate flight from local currencies during exchange-rate crises, according to an International Monetary Fund analysis.
Brandon Joel Tan, an IMF economist, wrote in a recent report that stablecoins can effectively serve as an alternative foreign-exchange market in countries where access to dollars is limited, Cointelegraph reported on July 11. Even when banks or official exchange counters are difficult to use, people can still access dollars through stablecoins.
That same feature can become a source of risk during a currency crisis. The report said stablecoin prices could reflect market demand for dollars in real time, triggering simultaneous selling of local currencies and a shift into dollar-denominated assets.
Stablecoins are already functioning as an unofficial foreign-exchange market in some countries, the report said. In Bolivia, airport shops were found using Tether’s USDT last year. In Argentina, users are exchanging pesos for dollar stablecoins through unofficial digital-asset exchange outlets.
The report proposed that regulators consider temporary curbs during crises to limit large transactions or panic-driven fund movements.
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