Domestic Stablecoins May Actually Boost Dollar-Backed Token Demand

International Monetary Fund first deputy managing director Dan Katz warned that domestic stablecoins could inadvertently boost demand for dollar-backed tokens. Speaking at the University of Cape Town on August 7, Katz noted that users are drawn to dollar-pegged stablecoins due to their superior liquidity, powerful network effects, and seamless cross-border acceptance.

Katz's remarks reflect a broader concern within the IMF about the rise of dollar-backed tokens in emerging markets. At the World Economic Forum in Davos in January 2026, panelists warned that this trend could pressure local monetary frameworks and trigger deposit shifts.

The IMF has been vocal about these dynamics, with Katz acknowledging the benefits of dollar-backed tokens for remittances, trade settlement, and financial inclusion in regions where local banking infrastructure is unreliable. However, he also highlighted the challenges posed by programmable money that moves at internet speeds.