Summary
A new IMF working paper by economist Brandon Joel Tan models how dollar stablecoins improve foreign currency access in fixed exchange rate regimes but can amplify currency runs during crises. Stablecoins create a visible high-frequency price for dollar demand that can signal scarcity and spur simultaneous moves out of local currency when official rates diverge from market rates. The paper cites real-world examples from Bolivia (airport retailers pricing goods using USDT) and Argentina (underground "crypto caves" exchanging pesos for dollar stablecoins). The Financial Stability Board separately warned that dollar stablecoins could expose emerging economies to currency substitution, weaker monetary policy, and circumvention of capital controls.
Key Facts
- Stablecoins create visible high-frequency dollar demand price in fixed-rate economies
- During crises, that price can trigger panic-driven simultaneous exits from local currency
- Bolivia: airport retailers priced goods using USDT as reference (June 2025)
- Argentina: "crypto caves" used for peso-to-stablecoin exchange during currency controls
- FSB (March 2026): warned of currency substitution, monetary policy weakening, capital control circumvention
- IMF recommends temporary regulatory limits during acute currency pressure
Why It Matters
As stablecoin adoption grows in emerging markets, regulators face a tension between financial inclusion benefits and systemic stability risks. The IMF's analysis provides the first formal framework for understanding when stablecoins help (providing dollar access when official channels fail) versus when they hurt (amplifying runs). This will influence how central banks in Asia, Africa, and Latin America approach stablecoin regulation.