IMF warns dollar stablecoins could threaten emerging market sovereignty

The International Monetary Fund (IMF) has raised concerns that U.S. dollar-pegged stablecoins could threaten the monetary sovereignty of emerging markets, CoinDesk reported. In a recent report, the IMF analyzed that stablecoins could undermine national capital controls by facilitating unregulated capital flows. The fund also noted that in emerging economies with high inflation and currency volatility, users might prefer dollar stablecoins over their local currency, potentially weakening central bank control. Furthermore, the IMF suggested that stablecoins could accelerate capital flight during a market panic in these regions. However, some experts argue that the current impact is minimal. They assess that the share of stablecoins in global foreign exchange flows remains insignificant, making it difficult for cryptocurrencies to influence emerging currency markets at present.