A new IMF report highlights that the rise of dollar-pegged stablecoins is creating a serious currency substitution risk in countries with fragile monetary frameworks.
The analysis shows that stablecoin adoption has accelerated in economies struggling with high inflation or weak confidence in local currencies. The IMF stresses that the ease of cross-border use is pushing households and businesses toward dollar-linked digital assets. With leading stablecoins tripling in size to 260 billion dollars since 2023 and processing 23 trillion dollars in transactions in 2024, the scale of this shift is becoming increasingly visible.
While activity is most concentrated in Asia, the IMF notes that the impact is far more pronounced in Africa, the Middle East and Latin America when measured relative to economic size. These regions already face elevated risks of currency substitution, making stablecoin adoption potentially more disruptive. The report acknowledges benefits such as enhanced competition and lower payment costs but warns that a sudden collapse could trigger reserve fire sales and broader financial instability.
Comparing regulations across Japan, the European Union, the United States and the United Kingdom, the IMF finds major gaps in oversight, from issuer eligibility to reserve management and cross-border treatment. Without stronger global coordination, the institution says stablecoins may intensify dollarization pressures and fragment payment systems, making a unified regulatory framework increasingly essential.
