IMF Raises Red Flags on Stablecoins’ Grip on Global Money Flows

• Stablecoins are digital currencies that are linked to stable things, like the US dollar. The market for the best ones, like USDT and USDC, is now worth more than $260 billion.
• The IMF says that these could make people in unstable economies stop using their own money and switch to these. This would make it harder for central banks to control the flow of cash.

Stablecoins have grown a lot in the past few years. Their value doubled in just two years, and in 2024 alone, they traded $23 trillion worth of goods. They are mostly linked to the dollar (97% of them), and they help with crypto trades. They could also be used for everyday payments if the rules say it’s okay.
You can think of them as digital dollars that can be sent and received quickly and cheaply across borders. But this ease can be a problem.

According to the IMF, stablecoins could make “currency substitution” happen faster. That’s when people in places with high inflation trade their local money for these stable ones. This makes people less trusting of their own money. This hurts the most in places where people don’t trust banks or where the economy isn’t strong.

Central banks may also lose track of the flow of money. Stablecoins get around controls, which makes money move faster and makes it less stable. When users keep their own keys in non-custodial setups, this is even harder to keep track of.
In a recent speech, IMF Chief Kristalina Georgieva said, “Accept reality, money is going digital.” You can’t keep yourself locked away. She’s right: ignoring this won’t help, but letting things get out of hand won’t either.

People use it more in new places. Stablecoins make up a big part of the GDP in Africa, the Middle East, and Latin America. This brings back old worries about dollarization. Overall, Asia has the most activity, but the effects on other economies could be bigger.

For example, businesses and families in places with high inflation use stablecoins to keep their money from losing value. This isn’t new; people used to hoard dollars. But digital versions make it easier and faster to send money across borders.

Scott Bessent, the US Treasury Secretary, said that this demand actually helps the US pay off its debt. This shows that some people are happy with it and others are not.

Check official source:https://www.imf.org/en/publications/departmental-papers/issues/2025/12/02/understanding-stablecoins-570602

Note: This news was written by our editor, rewritten with the help of AI, and reviewed by our editor to ensure its accuracy and compliance with our standards.