IMF Flags Stablecoins as Potential Risk to Emerging Markets Amid Growing Usage
The IMF's December 2025 report, "Understanding Stablecoins," highlights concerns about USD-pegged stablecoins potentially triggering currency substitution and capital outflows in vulnerable emerging markets, which could undermine local currencies.
The report warns that stablecoins might be used to bypass capital flow management measures by enabling cross-border capital movements outside traditional financial infrastructures.
There is evidence that cryptocurrencies and stablecoins serve as marketplaces for capital flight, especially in economies experiencing high inflation and volatile fiat currencies, where stablecoins could erode central bank policy control through currency substitution.
Despite these risks, analysts note that the stablecoin market remains relatively small and unlikely to have a significant macroeconomic impact at present. The market size is tiny relative to foreign exchange flows, and regulatory frameworks such as the proposed GENIUS Act, which would permit stablecoins more broadly, are not expected to become active until potentially January 2027.
Stablecoins backed by fiat have expanded dramatically, growing from approximately $5 billion in 2020 to nearly $300 billion today, with USDT and USDC comprising around $264 billion of that total. These stablecoins are primarily utilized for crypto trading rather than corporate treasury management.
Cross-border flows of stablecoins have surpassed those of unbacked cryptocurrencies since early 2022. Emerging market and developing economies (EMDEs) accounted for the largest share ($1.5 trillion in 2024) of these flows, with the Asia-Pacific region leading in absolute volume, though these flows remain a small fraction of the global payments market.
