The International Monetary Fund has identified a paradox in how stablecoins function within economies facing currency pressures: they simultaneously improve access to dollars while accelerating the capital flight that destabilises those currencies.
According to a working paper by IMF economist Brandon Joel Tan, dollar stablecoins create a visible, high-frequency price signal for dollar demand in parallel foreign-exchange markets. In countries where official channels ration dollar access, this transparency becomes dangerous. When the stablecoin price diverges sharply from the official exchange rate—a common occurrence during currency stress—it broadcasts growing scarcity to millions simultaneously, prompting coordinated abandonment of the local currency.
“Stablecoins make dollar-like claims easier to access while creating a visible benchmark for currency pressure,” Tan wrote in the paper titled “Stablecoins and Fragility in Fixed Exchange Rate Regimes.” The implication is stark: what appears as a financial inclusion tool during normal times transforms into a contagion vector during crises.
The Real-World Safety Valve Becoming an Escape Hatch
Stablecoin adoption has already taken root in economies with currency controls. As first reported by Cointelegraph, Bolivian retailers at El Alto airport began pricing goods in USDT in June 2025 while accepting bolivianos or physical dollars. Argentina presents a more dramatic case: residents turned to underground “crypto caves” in 2024 to exchange pesos for dollar stablecoins at black-market rates, effectively sidestepping currency controls that had frozen official dollar access.
These examples illustrate genuine utility. When banks cannot meet dollar demand and official channels restrict access, stablecoins fill a critical gap. They allow ordinary citizens to preserve savings in a currency that holds its value.
But the mechanism that makes stablecoins useful for everyday transactions becomes problematic at scale during a crisis. A single stablecoin price, visible on thousands of exchanges and apps, acts as a coordination tool for panic. Unlike traditional bank runs—which play out over days or weeks and require deliberate decisions—a stablecoin price can trigger mass currency flight in hours.
Regulators Tightening the Screws
The IMF’s analysis aligns with warnings from other financial authorities. On March 24, the Financial Stability Board issued guidance cautioning that dollar stablecoins expose emerging economies to currency substitution, weaker monetary policy transmission, and circumvention of capital controls. The FSB stopped short of recommending outright bans but flagged the need for closer regulatory monitoring as stablecoin integration deepens.
Tan’s paper suggests a pragmatic middle ground: temporary transaction limits during periods of unusual volatility or panic-driven activity. The approach acknowledges that stablecoins solve real problems in broken currency systems while containing their capacity to amplify crises.
The tension reflects a broader challenge for developing economies. Stablecoins emerge as a rational response to currency mismanagement and capital controls—but their very existence exposes the underlying fragility these policies were meant to conceal. Regulators cannot simply ban them away without acknowledging the demand they meet.