IMF warns local stablecoins could speed dollar adoption

Domestic stablecoins designed to strengthen the role of national currencies could have an unintended effect: making it easier for users to move into digital dollars. Summary IMF says local stablecoins could accelerate dollar-token adoption by making onchain currency conversion easier globally. Nearly 99% of stablecoins remain dollar-denominated, reinforcing network effects that local tokens struggle to match. South Africa shows limited dollar-stablecoin use while rand-linked tokens have attracted weaker demand so far. IMF recommends regulating onramps, offramps and onchain exchanges when stablecoins expand access to foreign currency. BIS found stablecoin inflows broadly similar across economies with and without cross-border usage restrictions imposed. International Monetary Fund First Deputy Managing Director Dan Katz raised the concern on Aug. 7 during a speech at the University of Cape Town, as regulators weigh how stablecoins could reshape payments and foreign currency demand in emerging markets. Katz said local currency and dollar stablecoins operating on the same blockchain infrastructure can make foreign exchange conversion easier. Users can potentially swap between them thro...