Stablecoin Demand Linked to Local Currency Pressure, Study Finds
A new study by the Bank of Korea has found that dollar-backed stablecoins can create downward pressure on local currencies. The researchers analyzed data from 2019 to 2025 and found that when global exchanges allow direct trading between fiat and stablecoins, market makers may need to sell the local currency to acquire US dollars.
The study focused on 12 currencies traded against dollar stablecoins on an overseas exchange. It found that the introduction of direct trading pairs led to a narrowing of stablecoin premiums by between 0.33 and 0.38 percentage points.
The findings suggest that increased demand for dollar-denominated digital assets can have a ripple effect on traditional foreign-exchange markets, even if it remains confined to cryptocurrency markets.