Local-Currency Stablecoins Could Fuel Dollar Stablecoin Proliferation

A senior IMF official has warned that introducing local-currency stablecoins could actually accelerate the adoption of dollar-based stablecoins. Dan Katz, Senior Deputy Director at the IMF, made this statement during a speech at South Africa's University of Cape Town.

Katz pointed out that users will prefer dollar stablecoins over those based on their own national currencies due to significant liquidity and network effects. He noted that dollar stablecoins are already more popular in regions like South Africa, where they are used more widely than stablecoins pegged to the local rand currency.

The IMF Senior Deputy Director emphasized the urgent need for a sophisticated regulatory framework to address these risks. He called for close coordination among policy authorities and stressed that all touchpoints where users buy, sell, or exchange stablecoins for other assets must be brought within the regulatory perimeter.