IMF Warns Dollar-Pegged Stablecoins Could Threaten Emerging Markets
The IMF has flagged USD-pegged stablecoins as a growing risk for emerging markets, warning they may facilitate currency substitution and accelerate capital flight. In its Dec. 10, 2025 note the fund said widespread use of dollar-backed digital tokens could weaken domestic currencies, undermine central bank control over money supply, and stress local financial systems during episodes of market stress. This matters because faster capital outflows and reduced policy traction can amplify inflationary pressures and limit crisis-response options. The IMF recommended enhanced monitoring, targeted macroprudential measures, and cross-border regulatory coordination to mitigate spillovers. Policymakers may also accelerate work on regulatory frameworks or central bank digital currencies to preserve monetary sovereignty and protect financial stability as stablecoin adoption grows.