Dr. Iñaki Aldasoro is a Principal Economist at the Innovation and the Digital Economy unit (Monetary and Economic Department) of the Bank for International Settlements (BIS) in Basel, Switzerland. His research interests revolve around money and banking, non-bank financial institutions, financial stability and financial innovation. He obtained his Ph.D. in Economics from Goethe University Frankfurt.
Abstract
Widespread use of stablecoins could have an important impact on the international monetary and financial system, particularly for emerging market and developing economies (EMDEs). Analysing their effect through the framework of international currency functions, we argue that stablecoins are most likely to affect private-sector store of value and medium of exchange roles, particularly in economies facing macroeconomic instability. Given that approximately 98% of stablecoin value is dollar-denominated, they are likely to initially reinforce existing currency hierarchies. We develop three scenarios to explore the range of potential outcomes. In niche adoption, impacts remain contained within crypto ecosystems. Digital dollarisation poses acute risks to monetary sovereignty in EMDEs through rapid currency substitution. Domestic stablecoin integration could harness efficiency gains while preserving policy autonomy, but it requires significant regulatory capacity. The ultimate trajectory will depend on adoption patterns, regulatory responses and the interplay with other forms of digital money.
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