Global Watchdog Warns of Stablecoin Risks to Monetary Sovereignty
A Thursday report from the International Monetary Fund cautions that widespread stablecoin adoption could speed up the replacement of national currencies in certain economies. This trend poses a direct challenge to the traditional control exerted by central banks over monetary policy and cross-border finance.
The study, titled “Understanding Stablecoins,” points to the potent combination of a stable US dollar peg and seamless digital transferability. In countries with unstable prices or weaker institutions, these features could make dollar stablecoins a preferred alternative to the local currency for daily use and savings.
“Stablecoins may contribute to currency substitution, increase capital flow volatility by circumventing capital controls, and fragment payment systems unless interoperability is ensured,” the IMF stated.
The organization emphasized that the threat is most acute where confidence in the domestic financial framework is already diminished.
The warning is based on the sector’s meteoric rise. Data in the report shows the market capitalization of the top two stablecoins has tripled since 2023, now standing at a combined $260 billion. Their annual trading volume soared to an astonishing $23 trillion in 2024.
