Domestic stablecoins could boost demand for dollar-backed tokens: IMF
An IMF official warned that domestic-currency stablecoins meant to reduce dependence on dollar tokens could have the opposite effect. If local and dollar stablecoins run on the same blockchain, users can easily swap between them through decentralized exchanges, liquidity pools, or peer-to-peer trades. That could shift foreign-exchange activity away from banks and dealers, reducing governments’ visibility and control over capital flows. The official said local stablecoins may even speed up adoption of dollar-linked “FX stablecoins,” since dollar tokens often have greater liquidity, network effects, and cross-border acceptance. He cited South Africa, where demand for rand-linked tokens is even weaker than for dollar-backed ones. The impact depends on the country: in highly dollarized economies, stablecoins may replace existing dollar holdings, while in countries with restricted dollar access and weak policy frameworks, they could raise foreign-currency demand. Authorities were urged to regulate on- and off-ramps and onchain exchange points.
