Crypto▼ Bearish
BIS: Stablecoins Bypass Capital Controls, Aid Dollarization in EMs
Stablecoin flows across 130+ jurisdictions are largely insensitive to capital controls, the BIS found, warning that dollar-pegged tokens accelerate unofficial dollarization in emerging markets.
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The Bank for International Settlements has warned that dollar-pegged stablecoins are creating a parallel channel for cross-border money that weakens emerging-market capital controls. In a research paper released Tuesday, the BIS said stablecoin activity across more than 130 jurisdictions “appears largely unaffected” by either broad-based or targeted capital flow restrictions.
Traditional policy tools – foreign-exchange regulations and administrative controls on inflows or outflows – tend to be “less effective” when applied to stablecoins than to conventional bank deposits, the BIS found. That gap matters most for emerging economies where authorities rely on those controls to manage currency volatility, protect reserves, or reduce instability during stress.
The Dollarization Channel
The BIS argued that widening stablecoin adoption opens a new route to dollar liquidity in places where access to U.S. currency is costly or constrained. Once such dollarization dynamics take hold, they can be hard to reverse. “The dollar, once established, is hard to dislodge,” the BIS wrote.