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FollowingInternational Monetary Fund warns: Dollar stablecoins may aggravate risks in fixed-exchange-rate economies
The International Monetary Fund (IMF) has released a new working paper warning that in countries with strictly controlled exchange rates, stablecoins pegged to the US dollar may also trigger the risk of rapid capital outflows in times of crisis while expanding access to foreign currency.
Stabiloins and Exchange Rate Dynamics
This study, written by IMF economist Brandon Joel Tan, explores how stablecoins-cryptocurrencies pegged to the U.S. dollar or other fiat currencies-affect parallel foreign exchange markets in economies with restricted access to official U.S. dollars.
Tan built a model that showed that stablecoins provide an alternative source of US dollars for individuals and businesses that cannot meet their US dollar needs through bank or official exchange channels. This channel of money acquisition is particularly significant in markets with fixed or strictly managed exchange rates, because such markets often lead to a widening gap between the official exchange rate and actual foreign currency demand.
Thepaper describes stablecoins as "creating more accessible dollar-like claims" and their market prices become a highly visible indicator of dollar demand. When the official exchange rate deviates significantly from the actual market level, this visibility can expose a serious dollar shortage and trigger large-scale selling of the local currency.
The working paper notes that under stress scenarios, stablecoin price fluctuations can catalyze simultaneous runs on currencies because people lose confidence in their currencies. Tan suggested that during currency crises, regulators should consider imposing temporary restrictions on large-scale or panic stablecoin trading to prevent disorderly capital outflows.
Small dictionary: A stablecoin is a digital asset that maintains a stable value by pegging its price to fiat currencies such as the U.S. dollar.
Real-world cases
The paper cites recent events in Latin America that demonstrate the practical use of stablecoins to circumvent strict currency controls. On June 9, 2025, it was reported that retailers at Bolivian airports used the stablecoin USDT as a reference for commodity pricing, although transactions were ultimately settled in U.S. dollars or the local currency Boliviano.
Argentines have also adopted stablecoins to protect their savings amid the devaluation of the peso and strict capital controls. In 2024, residents frequently visit the so-called "crypto caves"-underground exchange houses, where they exchange pesos for dollar-backed stablecoins at exchange rates closer to parallel markets, gaining an alternative way to obtain dollars outside regulated channels.
Regulatory concerns and risks
Regulators around the world have expressed caution about the increasingly widespread use of stablecoins. The Financial Stability Board (FSB), an international organization that monitors the global financial system, has warned that the large-scale adoption of U.S. dollar stablecoins could increase risks in emerging markets. These risks include accelerated currency substitution, weakening the effectiveness of monetary policy, and bypassing capital flow regulations.
The Financial Stability Board urges policymakers to pay close attention to the growth of stablecoins to assess its impact on liquidity and operational vulnerability, as these assets are increasingly closely intertwined with the domestic and international financial system.
As the stablecoin market continues to expand, policymakers are expected to strengthen regulation and may develop frameworks to deal with its potential impact, especially in economies with fixed or tightly managed exchange rates.
