The International Monetary Fund (IMF) has published a new working paper warning that dollar stablecoins could increase access to foreign currency in countries with tightly controlled exchange rates, while also raising the risk of rapid currency outflows during times of crisis.
Stablecoins and exchange rate dynamics
The research, written by IMF economist Brandon Joel Tan, examines how stablecoins—cryptocurrencies pegged to the US dollar or other fiat currencies—are affecting parallel foreign-exchange (FX) markets in economies where official access to dollars is restricted.
Tan developed a model demonstrating that stablecoins offer an alternative source of dollars to individuals and businesses unable to meet their needs through banks or official exchanges. This currency access is particularly impactful in markets where fixed or heavily managed exchange rates result in a widening gap between the official rate and the real demand for foreign currency.
Stablecoins were described as creating “dollar-like claims easier to access,” with their market prices serving as highly visible indicators of dollar demand. In times when the official exchange rate diverges significantly from market realities, this visibility can signal severe dollar shortages and prompt mass movements out of local currencies.
The working paper suggested that, under stress, stablecoin price movements could catalyze simultaneous currency runs as people lose confidence in the domestic currency. Tan recommended that regulators consider imposing temporary restrictions on large or panic-driven stablecoin transactions during currency crises to prevent disorderly outflows.
Mini dictionary: Stablecoin, a digital asset designed to maintain a stable value by pegging its price to a fiat currency, such as the US dollar.
Real-world use cases
The paper cited recent events in Latin America, highlighting real-world applications where stablecoins are being used to circumvent tight currency controls. On June 9, 2025, retailers at Bolivian airports reportedly used the stablecoin USDT as a reference point for pricing goods, although transactions remained settled in US dollars or the local currency, bolivianos.
Argentines have also adopted stablecoins to protect their savings amid a declining peso and stringent capital controls. In 2024, residents frequented so-called “crypto caves”—underground exchanges—where pesos were swapped for dollar-backed stablecoins at rates much closer to the parallel market, providing an alternative avenue for dollar access outside of regulated channels.
Regulatory concerns and risks
Global regulators have responded to the growing use of stablecoins with caution. The Financial Stability Board (FSB), an international body that monitors global financial systems, has warned that large-scale adoption of dollar stablecoins could increase risks for emerging markets. These risks include accelerated currency substitution, undermined monetary policy, and the bypassing of capital flow regulations.
The FSB urged policymakers to closely monitor the growth of stablecoins to assess the implications for liquidity and operational vulnerability, as these assets become increasingly entwined with both domestic and international financial systems.
As the stablecoin market continues to expand, policymakers are expected to increase supervision and possibly develop frameworks to address their potential impact, especially in economies with fixed or heavily managed exchange rate regimes.
