The new states that householdsand firms could move away from local currencies as dollar-denominated stablecoins expand. The IMF links this shift to high inflation and weak domestic trust.
It notes that the ease of cross-border use increases the likelihood of foreign-currency adoption through digital tokens. This trend could weaken national monetary frameworks and reduce their effectiveness. The report adds that two major stablecoins, and USDC, tripled in size since 2023 and reached $260 billion combined. Trading volumes climbed to $23 trillion in 2024, which expanded their global influence.
The IMF wrote that stablecoins may cause sharp capital flow swings and bypass existing capital controls. It also stated that payment systems could fragment when interoperability rules remain absent. The report argues that these risks grow larger in countries with weak institutions or unstable prices because trust in domestic currency falls.
This could reshape the monetary landscape for developing economies. Therefore, the fund frames stablecoins as a direct challenge to monetary sovereignty, placing them near core policy topics such as capital flow rules and central bank digital currency design.
