QuantorityIMF Research Flags Dollar Stablecoins as Currency Crisis Risk
An International Monetary Fund working paper warns that dollar-denominated stablecoins could amplify financial instability in nations with fixed exchange rates.
According to research published by the International Monetary Fund, dollar stablecoins present a potential threat to monetary stability in countries maintaining fixed exchange rate systems, particularly those defending overvalued pegs.
The working paper, authored by IMF researcher Brandon Joel Tan, identifies a specific vulnerability. In economies with fixed currencies, parallel markets often emerge where unofficial exchange rates diverge from official ones. Stablecoins could consolidate these fragmented price signals into a unified market mechanism, enabling rapid and coordinated capital flight when confidence weakens.
The research presents what Tan describes as a "state-dependent effect." During periods of economic stability, stablecoins appear to enhance economic welfare by offering households additional monetary options and reducing transaction costs. However, the same infrastructure becomes destabilizing during currency crises. The ease of moving value between stablecoins and traditional currency holdings accelerates the speed at which citizens can exit domestic currency positions simultaneously.
This mechanism differs from traditional banking sector runs because stablecoins operate across borders and outside conventional regulatory frameworks. Where fragmented black-market pricing previously limited the velocity of exits, stablecoins provide frictionless conversion—transforming what might have been a gradual drainage into a sudden, concentrated attack on reserves.
The IMF analysis suggests policymakers face a tension between the benefits of stablecoin adoption during normal times and the amplified crisis risks they introduce. The research does not prescribe specific policy responses but identifies the economic channels through which dollar stablecoins could destabilize exchange rate regimes.
BeInCrypto reports the paper represents a growing body of institutional analysis examining stablecoin effects on financial systems beyond developed economies. For the full analysis and IMF researcher Tan's methodology, readers can review the original report.
*Source: [BeInCrypto](https://beincrypto.com/imf-stablecoins-fragile-currency-pegs/). Summary by Quantority.*
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Mei-Lin leads Quantority's derivatives research, focusing on perpetual funding regimes, basis term structure and open-interest dynamics across major venues. She previously built futures analytics at an institutional market-data desk.
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