IMF paper: Dollar stablecoins could improve FX but risk runs
Dollar stablecoins could improve access to foreign currency in economies with fixed or managed exchange rates, an IMF working paper finds—but the same tokens may amplify currency runs during crises by broadcasting real-time dollar scarcity and coordinating exits from local currencies.
The findings come from economist Brandon Joel Tan’s paper, “Stablecoins and Fragility in Fixed Exchange Rate Regimes,” published by the International Monetary Fund. Tan modeled how stablecoins interact with parallel FX markets when banks and official exchange channels cannot meet dollar demand.
Key Takeaways
- An IMF working paper says dollar stablecoins could improve FX access where official dollar channels are rationed.
- The same tokens may amplify currency runs by creating a widely watched, high-frequency signal of dollar scarcity.
- During crises, that visible pricing could prompt coordinated exits from local currencies.
- Regulators may need temporary limits on unusually large or panic-driven stablecoin transactions.
- The Financial Stability Board has warned that dollar stablecoins could expose emerging markets to currency substitution and weaker monetary policy.
What did the IMF paper find about dollar stablecoins?
Tan’s model highlights a trade-off. In normal times, stablecoins can help households and businesses obtain dollar-like claims when traditional banking or official FX windows fall short. That can ease pressure on savers in countries with currency controls or persistent inflation.
But the paper also warns that benefits come with fragility. When domestic currency pressure intensifies, the stablecoin price becomes a real-time benchmark for dollar demand. If the official rate diverges sharply from market pricing, that signal can spread fear faster than slower-moving official data.
Why can stablecoins amplify currency runs?
Tan argued that stablecoins make “dollar-like claims easier to access” while creating a visible, high-frequency price for dollar demand. When a country’s official exchange rate sits far from the market rate, that price can signal growing dollar scarcity.
In a stress scenario, many users may abandon the local currency at the same time—effectively coordinating a run. The paper suggests regulators may need temporary limits on unusually large or panic-driven transactions to reduce that coordination risk without shutting off everyday access.
Where are stablecoins already used as parallel FX benchmarks?
The IMF paper’s argument reflects real-world use. On June 9, 2025, Bolivian airport retailers were seen pricing goods using USDT as a reference while still accepting US dollars or bolivianos. In 2024, Argentines used underground “crypto caves” to exchange pesos for dollar stablecoins at rates closer to the unofficial market.
Those examples show how stablecoins can preserve purchasing power when official dollar access is limited. For more on how crypto markets intersect with macro policy, see our Fintech & Crypto Alerts coverage.
What are global regulators warning about?
While use cases highlight benefits, watchdogs have flagged broader risks. On March 24, the Financial Stability Board said dollar stablecoins could expose emerging economies to currency substitution, weaker monetary policy, and circumvention of capital-flow measures.
The FSB urged lawmakers to track how the stablecoin sector develops and to respond to liquidity and operational risks as these tokens link more deeply with the broader financial system. For emerging-market central banks, the IMF paper adds a sharper question: whether faster dollar access today could make tomorrow’s currency stress harder to contain.