IMF Paper Warns Dollar Stablecoins Can Amplify Currency Runs Under Fixed Pegs

An International Monetary Fund (IMF) working paper says dollar stablecoins can amplify currency runs in economies defending an overvalued fixed exchange rate by turning fragmented parallel-market prices into a single, public signal that can coordinate exits. According to BeInCrypto, IMF researcher Brandon Joel Tan finds stablecoins can raise welfare in calm periods but deepen crisis risk once a peg becomes badly misaligned, citing Bolivia after its central bank lifted restrictions on virtual-asset transactions in June 2024. Tan’s simulations show average crisis exposure rising from 3.9% in a cash-only economy to 7.4% in a full stablecoin economy, and from 4.8% to 12.9% at the most severe misalignment.