Stablecoins May Boost Dollar Token Demand, IMF Warns
According to a senior International Monetary Fund (IMF) official, domestic stablecoins may inadvertently boost demand for dollar-backed tokens. First Deputy Managing Director Dan Katz made this observation in a speech at the University of Cape Town.
Katz noted that once local and dollar stablecoins operate on the same blockchain infrastructure, users can convert between them through decentralized exchanges, liquidity pools or peer-to-peer swaps. This could shift foreign exchange activity away from banks and currency dealers, reducing friction for authorities to monitor and manage capital flows.
He cited South Africa as an example, where dollar-backed stablecoins have limited traction but rand-linked tokens are even less popular. Many users may favor dollar tokens due to their liquidity, network effects, and acceptance across platforms and borders.
Katz cautioned that the risks vary by country. In highly dollarized economies, stablecoins may replace existing dollar holdings, while in countries with restricted access to dollars and weak economic frameworks, they could increase foreign-currency demand.