TreasureX Researchbis.wpStablecoins: A New Route for Dollarization That Could Weaken Monetary Control
Boris Hofmann, Aaron Mehrotra, Jan Paulick · July 21, 2026
A new study from the Bank for International Settlements (BIS) examines how stablecoins are becoming a modern form of "dollarisation" in emerging markets. Historically, people in countries with unstable currencies would hold US dollars in bank deposits to protect their savings. Now, they can hold dollar-pegged stablecoins instead, often outside the domestic banking system.
The researchers compared data on foreign currency deposits and stablecoin inflows across more than 130 economies. They found that "stablecoin dollarisation" behaves similarly to traditional deposit dollarisation: it rises when local currencies weaken and when inflation is high. However, stablecoins pose a greater challenge for central banks because they bypass local financial regulations and can be used anonymously.
Why does this matter? If citizens and businesses increasingly use stablecoins for everyday transactions and savings, the demand for the local currency falls. This weakens the central bank's ability to control interest rates, manage inflation, and stabilize the economy. The study suggests that policymakers need to consider how to regulate stablecoins to preserve monetary sovereignty.
For investors, this implies that in emerging markets, the rise of stablecoins could lead to tighter capital controls or new regulations, affecting fintech and crypto-related companies. It also highlights the ongoing shift of financial activity away from traditional banks.
Source: Bank for International Settlements, Working Paper No. 1370
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