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FollowingLocal stablecoins may accelerate U.S. dollar hegemony? The IMF reveals paradox
Local stablecoins, originally designed to reduce dependence on the U.S. dollar, may instead accelerate the dominance of the U.S. dollar. The International Monetary Fund (IMF) pointed out that these stablecoins operate on the same blockchain as the USDT/USDC, which in turn facilitates the escape of funds to the U.S. dollar. This counterproductive effect is thought-provoking-how should we respond when the solution itself becomes a problem?
Core contradiction
Local stablecoins have amplified the trend of dollarization through interoperability with USDT/USDC. With its liquidity and global penetration, TEDA Coin (USDT) sits firmly on the throne of stablecoin despite its risks. Should we regulate, accept or resist this monetary revolution?
Local stablecoins push up demand for US dollars: IMF's paradox warning
The IMF warns that stablecoins that anchor local currencies are intended to curb dollarization, but may backfire. What are the reasons? Once these assets enter the same blockchain (such as Ethereum, Wave Field, etc.), users can instantly exchange them for USDT or USDC through a decentralized exchange such as Uniswap. The result, far from strengthening the status of Nigeria naira, Ghanaian cedi or the CFA franc, opened the back door for a dollar invasion.
IMF Deputy Managing Director Dan Katz explained that in economies such as South Africa, the rand stablecoin had a difficult start, but users preferred dollar-backed tokens because of their higher liquidity and global acceptance. To make matters worse, this interoperability weakens the effectiveness of currency controls and deprives central banks of key regulatory levers. This is an irony for countries trying to protect their currency sovereignty-are local stablecoins the solution or a Trojan horse for dollar penetration?
USDT: The biggest winner in the paradox
When local stablecoins are difficult to gain a foothold, USDT is making profits. Its market value has exceeded US$110 billion. In emerging markets with high inflation and unstable currencies, USDT has become the first choice for safe haven. Ironically, the more countries promote local stablecoins, the more users turn to USDT because of its unparalleled liquidity and global recognition.
In Africa, Latin America and Southeast Asia, USDT has become the default currency for cross-border trade and is often used to circumvent foreign exchange controls. However, its lack of transparency and its controversial association with certain malicious entities make it a high-risk asset. The IMF warned that if local stablecoins fail to meet demand, TEDA could become a symbol of "dollarization 2.0" and become more difficult to control-a situation that would strengthen dependence on the dollar and erode national sovereignty.
Local stablecoins, originally intended to liberate emerging markets, may instead tie their economies deeper to the dollar. A critical debate looms between innovation and systemic risk: Should we regulate, embrace, or resist this monetary revolution?
