Dollar Stablecoins May Increase Currency Run Risk Says IMF

• Dollar stablecoins improve access to U.S. dollars.
• IMF research says public pricing can accelerate currency runs.
• The study favors targeted regulation over broad restrictions.

Dollar stablecoins can improve access to foreign currency in economies with fixed exchange rates, but they may also increase the risk of currency runs during periods of financial stress, according to a new IMF working paper. The research argues that dollar stablecoins provide valuable access to U.S. dollars when official foreign exchange channels are limited, while also creating new risks when confidence in local currencies weakens.

Dollar Stablecoins Improve Access to Foreign Currency

Economist Brandon Joel Tan found that dollar stablecoins help households obtain dollars in markets where official exchange systems restrict access. Tokens such as USDT provide transparent, real-time pricing that can become a reliable benchmark for foreign exchange markets.

The study points to Bolivia as an example. After virtual asset restrictions were eased in 2024, crypto transactions increased sharply. The USDT exchange rate gradually became the main reference for the parallel dollar market, with the central bank later publishing stablecoin prices on its website.

Dollar Stablecoins Can Coordinate Faster Currency Runs

The IMF paper also highlights a downside. Public pricing makes dollar stablecoins more than a payment tool. It creates a common market signal that allows households to react simultaneously when confidence in a currency deteriorates.

Model simulations showed crisis exposure increased from 3.9% in a cash-only system to 7.4% in an economy with stablecoins and transparent pricing. During severe exchange-rate misalignment, crisis exposure climbed to 12.9%.

Tan recommends a state-dependent regulatory approach rather than broad restrictions. He argues policymakers should preserve affordable access to dollar stablecoins during normal conditions while applying temporary safeguards against large capital outflows during periods of extreme currency stress.