IMF warns local stablecoins could boost dollar demand

A senior International Monetary Fund official has warned that government-backed stablecoins pegged to local currencies could inadvertently accelerate the adoption of digital dollars, complicating monetary policy in emerging markets. Dan Katz, the IMF's First Deputy Managing Director, delivered the cautionary remarks in a speech at the University of Cape Town on August 7, 2026.

Katz argued that the core risk stems from interoperability. Once a domestic stablecoin operates on the same blockchain infrastructure as major dollar tokens like USDT and USDC, users can easily convert between them through decentralized exchanges, liquidity pools, or peer-to-peer swaps. This process could shift foreign exchange activity away from traditional banks and currency dealers, reducing the friction that gives authorities tools to monitor and manage capital flows. In this way, Katz said, local-currency stablecoins might even accelerate the adoption of foreign-currency stablecoins.

The official pointed to the structural advantages held by dollar-pegged tokens, which account for roughly 98 to 99 percent of the stablecoin market. These digital dollars benefit from deep liquidity, extensive exchange...