IMF Warns Against Stablecoins And Their Dangers To Emerging Markets
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IMF is warning that stablecoins could worsen currency substitution and weaken central bank control in emerging markets. The International Monetary Fund (IMF) has warned that stablecoins could affect global money flows. It says that Dollar-backed stablecoins like USDT and USDC are rising in popularity, especially in countries with high inflation or weak monetary systems. This growth could encourage people and businesses to prefer stablecoins over local currencies, and possibly reduce central banks’ control over capital flows. Stablecoins and Currency Substitution Stablecoins are digital currencies designed to maintain a stable value, and are often pegged to the US dollar. The IMF report shows that these kinds of assets are increasingly used across borders. This is also happening faster than traditional cryptocurrencies like Bitcoin and Ethereum. The cross-border nature of stablecoins could simplify remittances and payments but also complicate monetary policy and financial stability in emerging markets. A new IMF report explores the challenges and opportunities. https://t.co/eVss5tPsFn pic.twitter.com/ERq3MwxPTz — IMF (@IMFNews) December 4, 2025 The report explains that in economies with weak monetary frameworks, households and businesses may turn to dollar-backed stablecoins instead of local money. This process, known as currency substitution, can reduce the ability of central banks to manage inflation or regulate capital flows. The IMF notes that countries with high inflation, weak institutions or low trust in local banks are especially vulnerable. Stablecoins can bypass capital controls and allow money to move freely across borders. Global Growth of Stablecoins The market for stablecoins has expanded so far and USDT and USDC (the two largest stablecoins) now account for over 90% of total issuance. USDT has a circulating supply of $185.5 billion, while USDC stands at $77.6 billion. When combined, their circulation has more than tripled since 2023 and trading volumes reached $23 trillion last year alone. This stood…
Filed under: News - @ December 5, 2025 10:25 pm