IMF warns that stablecoins may exacerbate capital outflows from emerging markets, experts say: The current size is not enough to cause systemic risks

The International Monetary Fund (IMF) pointed out in its latest “Understanding Stablecoins” report that stablecoins pegged to the US dollar may cause currency substitution and capital outflow risks in vulnerable emerging markets, weakening local currency stability. However, several experts say that the current stablecoin market size is still not enough to have a significant impact on the global macroeconomy.

The report highlights that stablecoins may bypass traditional financial intermediaries, thereby circumventing capital flow management measures (CFMs), making it easier for funds to move across borders during periods of market panic and accelerating currency depreciation. The combined market value of mainstream stablecoins such as USDT and USDC has reached $264 billion, which is close to France’s foreign exchange reserves and surpasses that of many countries such as the United Kingdom, Israel, and the United Arab Emirates. However, these “dollar equivalents” are more used in cryptocurrency trading than in real-world money management or circumventing regulations.

Noelle Acheson, author of “Crypto is Macro Now”, believes that although the market value of stablecoins has jumped from $5 billion in 2020 to nearly $300 billion, it is still much smaller than the global monetary base of the US dollar, and the overall impact on macrofinance is limited. She pointed out that about 80% of the use of stablecoins is concentrated in crypto transactions, making it difficult to have a substantial impact on emerging markets. In addition, although the GENIUS Act recognizes some stablecoins as a legal means of payment, they will not take effect until 2027, and emerging markets may still restrict the use of stablecoins.

David Duong, head of research at a compliance CEX institution, also said that stablecoins may accelerate the trend of dollarization in some countries, but their scale is still lower than that of traditional cross-border investment and bond flows, and their impact on systemic risk is limited. Compared to the trillions of dollars in daily transactions in the foreign exchange market, the current stablecoin volume is still in its early stages.

According to IMF data, since 2022, cross-border flows of stablecoins have surpassed unsecured crypto assets, with the Asia-Pacific region leading in absolute size, while emerging economies such as Africa, the Middle East, and Latin America have seen significant growth due to strong demand for US dollar payments. Although the related transaction volume is expected to reach $1.5 trillion in 2024, it still accounts for only a small portion of the global payments market.

Overall, the IMF’s risk warnings for emerging markets are forward-looking, but stablecoins are still quite far from triggering systemic financial pressures. As countries strengthen regulation and policy formulation, the future impact of stablecoins remains to be seen. （CoinDesk）