Overview
- The IMF warns dollar‑pegged tokens can drive currency substitution, weakening monetary control in high‑inflation or weak‑institution economies.
- The stablecoin market now exceeds $300 billion with about 97% of supply tied to the U.S. dollar and dominated by Tether and Circle.
- Reserves are concentrated in short‑term U.S. Treasuries (USDT about 75%, USDC about 40%), heightening spillover risk if mass redemptions trigger rapid asset sales.
- Policy recommendations include harmonized legal definitions, the “same activity, same risk, same regulation” principle, strict reserve and par‑on‑demand redemption rules, granular disclosure, and cross‑border supervisory colleges with stronger AML/CFT coordination.
- The IMF highlights regulatory and technical fragmentation across jurisdictions and blockchains as pathways for arbitrage and cross‑border instability, calling for unified oversight.