Local Stablecoins May Accelerate Dollar Adoption, Warns IMF
The International Monetary Fund (IMF) has expressed concern that local stablecoins could accelerate dollar adoption by making it easier for users to convert between currencies. First Deputy Managing Director Dan Katz made this point during a speech at the University of Cape Town, noting that when domestic and dollar stablecoins share blockchain infrastructure, users can swap between them through decentralized exchanges, liquidity pools, or peer-to-peer transactions.
Katz emphasized that nearly 99% of stablecoins are denominated in dollars, giving dollar-backed tokens a strong network advantage. This dominance creates stronger liquidity and broader acceptance across exchanges, payment platforms, and international markets, making it harder for local currency stablecoins to compete.
South Africa is an example where dollar stablecoins have gained limited traction, while rand-denominated stablecoins have attracted even less demand. The IMF recommends regulating onramps, offramps, and onchain exchanges when stablecoins expand access to foreign currency.