Researchers found dollar-backed stablecoins are less affected by capital controls than traditional bank deposits, raising new questions about monetary sovereignty in emerging markets.
Researchers at the Bank for International Settlements (BIS) found that dollar-backed stablecoins are creating a new form of “digital dollarization” that appears largely unaffected by capital controls, particularly in emerging markets.
The new study suggests governments may have less ability to curb stablecoin adoption than traditional foreign-currency bank deposits.
BIS researchers analyzed foreign-currency deposits and dollar-pegged stablecoin inflows across more than 130 economies, finding that both tend to increase during periods of macroeconomic stress. Unlike traditional bank deposits, however, stablecoin flows showed little response to capital controls or other FX restrictions. The authors said this likely occurs because “stablecoins are partly circulating outside the regulatory perimeter.”
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