IMF President Says Stablecoins May Undermine Currency Sovereignty in Emerging Markets

IMF President Georgieva stated at the Jackson Hole annual meeting that stablecoins and tokenization could enhance global financial liquidity, reduce the costs of large cross-border payments, and increase speed. However, stablecoins may also exacerbate currency substitution, capital flows, and exchange rate volatility, undermining capital controls and currency sovereignty. Dollar stablecoins could expand the global network effects of the dollar, marginally lowering U.S. financing costs, but cannot replace fiscal discipline. Discussions indicate that the BIS leans towards marginalizing stablecoins and centering tokenized deposits; the ECB favors central bank currencies on-chain; and the IMF acknowledges the efficiency of stablecoins in cross-border payments, focusing risks on currency substitution and capital flows in emerging markets.

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