IMF Paper: Dollar Stablecoins Are a Lifeline Until Everyone Yanks It at Once 💱

A new International Monetary Fund working paper finds that dollar stablecoins expand access to foreign currency in fixed-exchange-rate economies but can amplify currency runs once a peg becomes badly misaligned, turning fragmented parallel-market prices into a single, public signal that households react to simultaneously. The paper, "Stablecoins and Fragility in Fixed Exchange Rate Regimes," was authored by IMF economist Brandon Joel Tan.

The model isolates the effect by comparing three economies: a cash-only market, a stablecoin market that only lowers access costs, and one that also sharpens the public dollar price. Average crisis exposure rises from 3.9% in the cash-only setup to 7.4% in the full stablecoin setup, and at the most severe misalignment it climbs from 4.8% to 12.9%. The gap between the second and third cases is Tan's central point: cheaper access makes exit easier to execute, while a precise public price makes exit coordination easier, with coordination driving most of the added risk. Welfare effects move in both directions, peaking near a 1.2% gain during calm conditions, turning negative past a misalignment threshold of 0.59, and reaching -6.3% at the extreme. Tan also notes that broad restrictions can be regressive because they remove a low-cost dollar option from unbanked households, and that stablecoin rules cannot substitute for macroeconomic adjustment.

The abstract frames the result as state-dependent: "Stablecoins generate a state-dependent welfare effect. They expand access to foreign-currency and can improve allocation by making beliefs about misalignment more informative, but the same public price can also coordinate runs by making beliefs and actions more synchronized." Tan argues stablecoins make "dollar-like claims easier to access" while creating a visible, high-frequency price for dollar demand, which can signal growing dollar scarcity and prompt simultaneous exits from the local currency.

The findings track real-world adoption. On June 9, 2025, Bolivian airport retailers were pricing goods using USDT as a reference while still accepting US dollars or bolivianos, and in 2024 Cointelegraph reported that Argentines used underground "crypto caves" to exchange pesos for dollar-stablecoins at rates closer to the unofficial market. Bolivia's central bank lifted restrictions on virtual-asset transactions in June 2024, after which such transactions in the financial system multiplied twelvefold from July 2024 to May 2025, with the USDT-to-boliviano rate becoming the everyday parallel-dollar reference and the central bank itself publishing USDT prices on its website.

Regulators have separately flagged broader risks. On March 24, the Financial Stability Board said dollar stablecoins could expose emerging economies to currency substitution, weaker monetary policy and the circumvention of capital-flow measures, urging lawmakers to assess how the sector develops as stablecoins interlink with the broader financial system. Tan recommends that policymakers consider temporary limits on unusually large or panic-driven transactions during periods of severe pressure rather than broad restrictions on stablecoin use.