Global central bank officials: The U.S. is pushing stablecoins to accelerate "dollarization," threatening emerging markets.

The United States is vigorously promoting the development of stablecoins, which is triggering collective alarm among central bank officials worldwide. Several top financial policymakers warn that the rapid expansion of USD-denominated stablecoins will intensify the risk of "dollarization" in emerging market economies, undermining their monetary sovereignty and capital control capabilities, and opening the door to crimes such as money laundering and tax evasion.

Pablo Hernández de Cos, President of the Bank for International Settlements (BIS), stated in a speech in Japan this Monday that stablecoins "pose serious risks to financial integrity and may encourage regulatory evasion," warning that their rapid spread will make it harder for emerging markets and developing countries to maintain capital controls.

Bank of England Governor Bailey also said in Washington that the degree of stablecoin penetration into domestic currency substitution deserves close attention, and pointed out that international progress in establishing stablecoin regulatory rules has clearly slowed down.

These warnings come as the global stablecoin market has reached $315 billion, with about 98% denominated in US dollars. The Trump administration's active endorsement of digital assets and the passage of the "Genius Act" by the US Congress last year are providing institutional support for further expansion of this market.

Emerging Markets Face Threats to Monetary Sovereignty

The impact of stablecoins on emerging markets became a key topic of discussion among senior officials during last week's IMF and World Bank annual meetings in Washington.

Tobias Adrian, Director of the IMF Monetary and Capital Markets Department, told the Financial Times that in some emerging market countries, dollar stablecoins already account for "a considerable proportion of payment volumes, including cross-border payments." He acknowledged that stablecoins have advantages in speed and cost for cross-border payments, but also noted: "The biggest challenge is dollarization. For central banks, this may be a threat to monetary sovereignty."

Pablo Hernández de Cos further pointed out that the proliferation of stablecoins will intensify the "dollarization risk" in emerging markets and provide new channels to circumvent capital controls. He also cited estimated data showing that stablecoins currently account for the majority of illicit transactions in the crypto ecosystem, and their increasingly widespread use "opens new avenues for tax evasion."

Reza Baqir, former Governor of Pakistan's central bank and currently at consulting firm Alvarez & Marsal, said: Anything that may impact capital controls makes me extremely concerned.

Stablecoins Accelerate Penetration in Emerging Markets

The expansion momentum of stablecoins in emerging markets is not to be underestimated. More and more residents in these markets are using dollar stablecoins as tools to hedge against local currency devaluation, avoid high inflation, and bypass international payment restrictions.

Standard Chartered Bank analysts estimate that dollar stablecoin savings held by emerging market residents may grow from $173 billion at the end of last year to $1.22 trillion by the end of 2028—although this would still account for only about 2% of total bank deposits in those countries.

Standard Chartered Bank expects the strongest growth will be focused in countries that have recently experienced balance of payments crises or are under IMF stabilization programs, including Egypt, Pakistan, and Bangladesh.

Slow Progress on Regulatory Rulemaking

Faced with the rapid expansion of stablecoins, global regulatory coordination has fallen behind. Financial Stability Board Chairman and Bank of England Governor Bailey admitted that progress by the international community in formulating unified rules for stablecoins has slowed. "If you had asked me a year ago, I would have said we were making rapid progress. But I think this is a problem we must face soon."

Meanwhile, the global anti-money-laundering body FATF issued a report this March warning that stablecoins "are attractive to criminals" and that virtual currencies are increasingly becoming the preferred method of laundering proceeds from ransomware, phishing, and other cybercrimes.

Responses vary by country. Brazil has amended legislation to bring stablecoin providers under bank anti-money-laundering compliance requirements and has set a $100,000 cap on many cross-border transfers.

Dan Katz, former US Treasury staffer and current IMF Deputy Director, takes a relatively optimistic view, believing stablecoins can promote competition and reduce costs in the payments sector, and stated that countries can "improve macroeconomic frameworks" to withstand rising dollarization pressures.

As the forum institution for many central banks globally, BIS has long maintained a cautious stance towards stablecoins. Last year, BIS noted that this new form of digital cash "performs poorly" against key criteria for becoming real currency.

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