Stablecoin Demand Linked to Local Currency Depreciation: Bank of Korea Study
A recent study by Bank of Korea researchers Jihyun Kim and Sangheum Cho found that direct stablecoin pairs can be associated with depreciation pressure on local currencies in some countries.
The research examined the initiation of direct transactions between local currencies like the Brazilian real and USDT and USDC on Binance. When investors use local currency to buy stablecoins, market makers may sell the local currency and buy dollars to balance their positions.
This can create a flow from crypto platforms that impacts the exchange rate. The study covered 12 currencies with sufficient data between 2019 and 2025.
The research found that following the opening of direct local currency-stablecoin pairs, the premium, indicating that the local market price of stablecoins remained high relative to their dollar equivalent, declined by approximately 0.33 to 0.38 percentage points.