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FollowingThe Bank of Korea reports: Linkage mechanism and policy implications between stablecoins and foreign exchange markets
The Bank of Korea issued an issue memorandum stating that direct trading pairs of fiat currencies to stablecoins on the Binance exchange have created a channel to enter the foreign exchange market for demand for dollar-pegged stablecoins, thus pushing up exchange rate pressure on some local currencies. The report, titled "Stabiloin-Foreign Exchange Linkage: An Analysis of Listing Evidence from Fiat Coin Trading on Global Exchanges", was released on September 3, 2026 by economists Kim Jihyun and Cho Sanghheum of the Bank of Korea's International Financial Research Team.
How the demand for stablecoins is transmitted to the foreign exchange market
The author has sorted out a two-step transmission mechanism. When Binance launched trading pairs such as the Brazilian Real versus USDT or USDC, local investors could directly purchase stablecoins, while global market makers provided a supply of tokens. These intermediaries then had an incentive to sell local currencies and buy U.S. dollars in the foreign exchange market to balance their positions, creating a path through which demand for stablecoins influenced the exchange rate. This effect is most significant when there is a global intermediary with simultaneous access to both markets as direct counterparties.
Market dynamics revealed by data
The analysis covered 12 currencies with sufficient cross-exchange data, and the introduction of trading pairs spans from 2019 to 2025. Data showed that after the currency was installed on the online fiat and stablecoin trading pairs, the local stablecoin premium dropped by approximately 0.33 percentage points, and the higher premium was associated with the significant depreciation of the local currency. The "net buyer initiated order flow" that captures market demand pressure for stablecoins is also significantly related to the devaluation of local currencies. Among the 30 currencies tracked by the authors, the_median_premium of the U.S. dollar stablecoins is approximately 0.8%, while Binance holds approximately 69% of the USDT and USDC balances deposited across exchanges, highlighting its central role in the market structure studied.
South Korea's exceptions and policy implications
South Korea shows the opposite pattern. Due to the lack of direct Korean won versus stablecoin, the crypto demand shock caused the local stablecoin premium to increase by approximately 0.85 percentage points, but had no statistically significant impact on the exchange rate of the Korean won against the U.S. dollar; in contrast, in Brazil, the same shock only increased the premium by approximately 0.11 percentage points, but caused the real to depreciate by approximately 0.12%. The authors believe that as South Korea's digital asset market opens up to companies and foreign participants, the policy tension between the central bank and lawmakers should be re-examined and considered in the context of the broader advancement of stablecoins in Asia. At the same time, efforts should be made to promote the internationalization of the Korean won and deepen foreign exchange liquidity so that the market can absorb such shocks.
