IMF Warns Stablecoins Could Shift Emerging Market Currency Power
- Stablecoin flows rise in emerging markets as digital dollars move with unmatched speed.
- New IMF findings show a growing strain on nations that face heavy demand for foreign value.
- The report notes rising outflows as users shift to USD tokens during market pressure.
The International Monetary Fund warned in its December 2025 report that USD-pegged stablecoins may trigger capital outflows, faster cross-border transfers, and currency substitution in vulnerable emerging markets as adoption grows. The report said that stablecoins could bypass capital flow controls and enable rapid movement of funds during periods of stress. It also noted that evidence already links crypto use, including stablecoins, to episodes of capital flight.
Stablecoin Use Cases Raise Policy Concerns
The report, titled “Understanding Stablecoins,” examined global demand, regulatory approaches, and macro-financial risks linked to rapidly growing stablecoin markets. It said stablecoins allow transactions outside conventional banking channels and therefore create new vulnerabilities.
The IMF cited research by Cardozo and others (2024), He and others (2022), and the IMF (2023) to support concerns that stablecoins can help users route flows outside established intermediaries.
The report said that stablecoins may weaken capital flow management measures because these controls rely on regulated institutions. It explained that public blockchains provide channels that operate outside those institutions and enable unrestricted movement of USD-pegged tokens across jurisdictions.
The IMF noted that stablecoin penetration is growing fastest in economies facing high inflation and volatile currencies. It said such conditions increase local demand for dollar-denominated instruments. The report added that locals may turn to USDT or USDC during uncertainty and that these tokens together hold $264 billion in market capitalization, based on CoinDesk data.
Growing Flows Intensify Pressure on Local Currencies
The IMF said USD-pegged tokens could accelerate outflows during market stress. It pointed to past events to illustrate this risk. It asked readers to consider a scenario where stablecoins existed during the 2013 taper tantrum, when Federal Reserve signals caused sharp emerging-market currency drops and outflows. The report suggested that seamless peer-to-peer transfers could have quickened those outflows.
Stablecoins accepted under the U.S. GENIUS Act as permitted payment instruments can be traded freely on public blockchains. The IMF said this access allows anyone to hold USD-equivalent value without opening a bank account or engaging with traditional forex controls.
The report said these tokens operate as digital dollar channels and therefore may weaken monetary authority tools. It added that stablecoin activity now rivals the scale of several sovereign foreign-exchange reserves. The combined USDT and USDC market cap is near France’s reserves and larger than those of the United Kingdom, Israel, the UAE, and Thailand.
The IMF asked a central question: How will emerging markets manage monetary stability if residents increasingly choose USD-linked tokens instead of domestic currencies?
Related: Wall Street Banks Quietly Test Stablecoins With Coinbase
Global Data Shows Expanding Cross-Border Stablecoin Activity
New IMF data shows stablecoin cross-border flows surpassing flows from unbacked crypto assets since early 2022. The gap continues to widen.
The Asia-Pacific region records the largest absolute volumes. North America follows closely. Yet flows scaled to GDP show stronger trends across Africa, Latin America, the Middle East, and the Caribbean.
The IMF said these regions dominate 2024 activity, accounting for the largest share of $1.5 trillion in cross-border stablecoin flows. It described these movements as small relative to the global payments system but significantly different from SWIFT corridors, which concentrate in advanced economies.
The report additionally presented the recommendations from the IMF, the Financial Stability Board, and global standard-setting organizations. It enumerated nine suggested actions, including reinforcing monetary frameworks, clarifying legal treatment, applying FATF standards, and increasing international cooperation.
