Standard Chartered says $1T of EM deposits may move to stablecoins

Standard Chartered warned in a report published Monday that the rapid adoption of U.S. dollar‑pegged stablecoins could pull as much as $1 trillion in deposits out of banks in emerging markets over the next three years, as savers and businesses seek dollar-denominated, liquid alternatives to local banking systems. The bank projects that stablecoin holdings used for savings in developing economies could rise to about $1.22 trillion by the end of 2028 from roughly $173 billion today.

Stablecoins are cryptocurrencies whose value is tied to another asset, most commonly the U.S. dollar, and are widely used for payments and cross‑border transfers. The report says roughly 99 percent of current stablecoins are pegged to the dollar and that about two thirds of demand for stablecoins is already coming from emerging markets. "We see the potential for $1 trillion to leave emerging market banks and move into stablecoins in the next three years," the report said.

Standard Chartered attributed the shift to several persistent vulnerabilities in emerging economies: weak currencies, high inflation, limited foreign reserves and heavy remittance flows. Consumers and firms in countries that have...