Stablecoins as a catalyst for currency crises: a threat to countries with fixed exchange rates
The growing penetration of dollar stablecoins into the economies of developing countries carries systemic risks, especially for states with fixed exchange rates. Our analysis shows that these digital assets are not just a tool for transactions, but a powerful factor capable of accelerating currency crises.
The key problem is that "stablecoins" provide the population and businesses with direct access to dollar assets. In times of economic instability, this triggers a massive capital outflow from the national currency into stablecoins. Such a scenario creates enormous pressure on the gold and foreign exchange reserves of central banks, which are forced to spend them on maintaining an artificial exchange rate.
Our model demonstrates a direct correlation: the higher the level of stablecoin penetration, the faster panic spreads among market participants. Even a minor external shock can trigger an avalanche-like shift into dollar assets, making a fixed exchange rate practically unviable. It is important to emphasize: stablecoins are not the root cause of instability, but they act as a powerful catalyst, exacerbating existing macroeconomic imbalances.
Countries with low trust in their national currency, weak monetary policy, and a rigid exchange rate peg are most at risk. Regulators urgently need to reconsider their approaches to assessing financial stability, incorporating stablecoin flow analysis into them. Without this, any measures to protect the currency regime may prove ineffective.
Recall that in June, the global turnover of stablecoins reached a record $1.79 trillion, which only underscores the scale of the threat. Last December, we already warned about the risks of losing control over capital movements in countries with high inflation.
Expert opinion: The stablecoin market is growing exponentially, and ignoring its impact on traditional financial systems is playing with fire. Countries with fixed exchange rates should either tighten control over digital assets or prepare for an inevitable revision of their monetary policy. There is no third option.