FSB Warns of Dollar Stablecoin Risks to Emerging Market Stability
The Financial Stability Board (FSB) has identified dollar-backed stablecoins as a growing threat to financial stability in developing economies. Its latest global assessment highlights how these digital assets could undermine monetary policy and weaken local currencies.
Emerging markets facing inflation and currency devaluation are particularly vulnerable. The FSB notes over $150 billion in stablecoin circulation globally, with adoption accelerating in jurisdictions struggling with foreign exchange access.
Monetary authorities lose effectiveness when economic activity migrates to dollar-denominated stablecoins. Interest rate adjustments become less impactful as transactions occur outside domestic financial systems. The board warned large-scale conversions between local currencies and stablecoins could trigger additional volatility.
