BIS Warns of Digital Dollarization Risks from Stablecoins in Emerging Markets

The Bank for International Settlements (BIS) researchers have found that dollar-pegged stablecoins are creating a new form of digital dollarization that is almost insensitive to capital controls in emerging markets, making it more difficult for governments to regulate these assets compared to traditional foreign currency deposits. The study analyzed inflow data of foreign currency deposits and dollar stablecoins across over 130 economies, revealing that both have increased during macroeconomic stress periods. However, the flow of stablecoins shows almost no response to capital controls or foreign exchange restrictions, possibly because they operate partially outside the regulatory framework. The BIS points out that stablecoins could undermine monetary sovereignty, and policymakers need to employ new tools to address financial stability risks.

Disclaimer: This content is provided for general branding and informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online events, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets or to use any services. Crypto assets are highly volatile and may result in loss. WEEX services and online events may not be available in all regions and are subject to applicable laws, regulations, and eligibility requirements. You are responsible for ensuring that your use of WEEX services complies with local laws and for carefully assessing the risks before participating in any crypto-related activities.