Stablecoin Demand Pressures Local Currencies, Korean Research Finds

The Bank of Korea has released a study showing that stablecoin demand can put downward pressure on local currencies when investors have direct access to fiat trading pairs.

The researchers analyzed data from 12 currencies and found that introducing direct local-currency stablecoin pairs strengthened the link between crypto activity and foreign exchange markets.

The study discovered that buyer-initiated stablecoin flows were associated with depreciation in currencies with direct trading pairs, while local stablecoin premiums fell by around 0.33 to 0.38 percentage points after direct fiat pairs were introduced.