IMF Warns Dollar Stablecoins Fuel Currency Runs During Crises

A new IMF working paper suggests that dollar stablecoins can improve access to foreign currency in economies with fixed exchange rates but may also increase the risk of currency runs during periods of financial stress.

The research, conducted by economist Brandon Joel Tan, found that dollar stablecoins help households obtain dollars when official exchange systems restrict access. Tokens such as USDT provide transparent, real-time pricing that can become a reliable benchmark for foreign exchange markets.

The study points to Bolivia as an example. After virtual asset restrictions were eased in 2024, crypto transactions increased sharply. The USDT exchange rate gradually became the main reference for the parallel dollar market, with the central bank later publishing stablecoin prices on its website.

However, the paper also highlights a downside. Public pricing makes dollar stablecoins more than a payment tool; it creates a common market signal that allows households to react simultaneously when confidence in a currency deteriorates. Model simulations showed crisis exposure increased from 3.9% in a cash-only system to 7.4% in an economy with stablecoins and transparent pricing.

Tan recommends a state-dependent regulatory approach rather than broad restrictions, arguing that policymakers should preserve affordable access to dollar stablecoins during normal conditions while applying temporary safeguards against large capital outflows during periods of extreme currency stress.