Description

Foreign-currency foreign-issued stablecoins—most of which are denominated in U.S. dollars and issued in a small number of jurisdictions—could increasingly affect macro-financial conditions in recipient countries if their use expands beyond crypto-asset trading. This paper examines how wider adoption could reshape access to foreign-currency assets, change capital flows, foster currency substitution, and impact financial stability. It highlights that risks are likely to be greater where macroeconomic frameworks are weak, payment systems are costly or inefficient, access to foreign-currency assets is limited, or legal and regulatory safeguards are incomplete. At the same time, FX stablecoins may offer benefits, including faster and cheaper payments, greater competition, and broader financial inclusion. The paper outlines initial considerations on policy responses—covering macro-financial policies, legal and regulatory frameworks, data collection, and international cooperation—to help countries preserve macro-financial stability while harnessing innovation.

More publications in this series: Departmental Papers / Policy Papers