Domestic stablecoins may increase demand for dollar-backed tokens
The International Monetary Fund believes domestic stablecoins could boost demand for dollar-backed tokens.
Domestic-currency stablecoins are intended to reduce reliance on dollar-backed tokens, but they may make it easier for users to move funds into digital dollars.
Once local and dollar stablecoins operate on the same blockchain infrastructure, users can convert between them through decentralized exchanges, liquidity pools, or peer-to-peer swaps, potentially reducing the role of banks and currency dealers in foreign exchange activity.
The shift could also move foreign exchange activity away from banks and currency dealers, reducing the friction that gives authorities tools to monitor and manage capital flows.