Dollar stablecoin use stayed elevated after capital controls ended, new research suggests

Dollar stablecoin activity can remain elevated after capital controls end, according to historical estimates presented by IMF economist Marco Reuter.His Oct. 31 VoxEU column adds a persistence finding to the debate over stablecoin dollarization. Earlier Bank for International Settlements research points in a similar direction on the durability of dollar access. The evidence is less conclusive about how much monetary control governments lose: persistent transfers, lasting dollar holdings and a weaker response to interest rates are different outcomes.Dollar use after restrictions endReuter compares 217 activations of capital-flow measures with countries that introduced no measure in the surrounding months. The estimates use the month before activation as their baseline. Following tighter restrictions on capital outflows, estimated cross-border stablecoin activity rises roughly 30% within six months and remains elevated through the twelfth month.In a separate analysis of subsequent removals, he reports no detectable retreat. He also says the data reject the hypothesis that removals fully reverse the initial increase. The column does not give a precise post-removal duration.The differe...