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BIS: Stablecoins Evade Capital Controls in 130 Economies
The BIS warns dollar-backed stablecoins bypass capital controls in emerging markets, creating new challenges for central banks managing currency demand. The study covers 130+ economies.
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The Bank for International Settlements has warned that dollar-pegged stablecoins are increasingly bypassing traditional capital controls, a finding that complicates monetary management for emerging-market central banks already struggling with dollarization.
In a working paper covering more than 130 economies, BIS researchers compared conventional foreign-currency deposits with cross-border stablecoin inflows. They concluded the two share similar macroeconomic drivers but respond in opposite ways to government restrictions. Stablecoin adoption rises during exchange-rate volatility and banking crises, the paper found. Traditional dollar deposits also rise in those periods. They remain subject to capital controls and foreign-exchange rules. Stablecoin flows do not.
The reason, the researchers said, is the decentralized nature of public blockchains. Transfers happen outside the regulatory channels that monitor banks and cross-border payments. That means existing policy tools designed to limit foreign-currency outflows are less effective when applied to blockchain-based assets.
"Regulating stablecoin issuers alone may not be enough," the BIS paper said. Even when issuers operate under strict rules, the underlying tokens can continue moving across public blockchains beyond the reach of capital controls.
The study also found little evidence that stablecoins simply replace existing dollar bank deposits. Instead, they create an additional channel for households and businesses to gain dollar exposure, particularly in emerging markets where local currencies face persistent inflation or repeated financial instability.
Banking crises are more closely associated with rising stablecoin adoption than with traditional deposit dollarization, the BIS researchers said. That reflects the appeal of assets that operate outside the banking sector during periods of stress.
The paper aligns with recent assessments from the International Monetary Fund, which has warned that stablecoins can lower payment costs and improve access to dollar liquidity. Widespread adoption may reduce demand for local currencies and complicate monetary policy in economies already vulnerable to dollarization, the IMF said.