Benefits and Risks of Stablecoins

An IMF paper examines stablecoins’ potential benefits and risks while surveying emerging international regulatory frameworks ¹.

While stablecoins offer promising benefits such as faster and cheaper cross-border payments, increased financial inclusion, and reduced remittance costs, they also pose substantial risks, including potential runs on reserves, currency substitution that undermines national monetary policy, circumvention of capital controls, and facilitation of illicit activities.

A Sveriges Riksbank staff paper also looks at the topic, arguing that stablecoins could meaningfully improve payments, especially cross border, although this is tightly bound up with significant risks and policy trade-offs ².

Overall, the Riksbank paper concludes that stablecoins should evolve into tightly regulated private money aligned with existing monetary systems, and that strong international coordination is essential to manage their cross border, systemic implications.