A new working paper from the International Monetary Fund (IMF) indicates that dollar-denominated stablecoins have the potential to accelerate and synchronize currency runs in countries defending overvalued fixed exchange rates. The research explains that by consolidating information from fragmented parallel markets into one transparent, public price, these digital tokens may enable households to quickly move their funds when currency pegs come under pressure.
Stablecoins and parallel currency markets
When governments set a fixed exchange rate above the true market value, access to foreign currency often becomes restricted. As a result, buyers seek out parallel markets—typically dealing with street vendors, brokers, or banks—where multiple prices emerge, obscuring the real scarcity of dollars.
The IMF paper, authored by researcher Brandon Joel Tan, analyzes how stablecoins such as Tether (USDT), which track the US dollar, trade directly against local currencies on cryptocurrency exchanges. This constantly updated price establishes a clear, unified signal for the value of the dollar in the parallel market, sometimes overshadowing the fragmented rates previously quoted by different market intermediaries.
On one hand, this greater transparency assists households in managing risk and hedging against currency misalignment. However, a single, easily accessible price reference can also facilitate mass exits from a local currency, as large numbers of people react simultaneously to unfavorable shifts in the peg.
Mini dictionary: International Monetary Fund (IMF): A global financial institution that provides policy advice, financial assistance, and guidance to member countries facing economic difficulties or instability.
Stablecoins generate a state-dependent welfare effect. They expand access to foreign currency and can improve allocation by making beliefs about misalignment more informative, but the same public price can also coordinate runs by making beliefs and actions more synchronized.
A recent example highlighted in the research is Bolivia, where the central bank lifted restrictions on virtual-asset transactions in June 2024. From July 2024 to May 2025, the volume of such transactions within the Bolivian financial system increased twelvefold. During this period, the exchange rate between USDT and the boliviano became the main reference for the parallel dollar price, to the extent that the Bolivian central bank began publishing the USDT rate on its website.
Welfare impacts and regulatory options
Tan’s analysis uses simulations to compare three types of economies: one relying solely on cash, one granting stablecoin access to lower transaction costs, and a third where stablecoin prices act as a highly visible public reference. His results show that crisis exposure rises as transparency increases. Specifically, average crisis exposure jumps from 3.9% in a cash-only setting to 7.4% when both stablecoin access and public pricing are present. At maximum exchange-rate misalignment, the difference is more pronounced: the risk escalates from 4.8% to 12.9%.
| Economic Model | Avg. Crisis Exposure | Exposure at Max Misalignment |
|---|---|---|
| Cash Only | 3.9% | 4.8% |
| Stablecoin (Access only) | — | — |
| Stablecoin (Access + Public Price) | 7.4% | 12.9% |
The welfare impact follows a dual pattern. During stable conditions, welfare gains can reach up to 1.2%. However, as misalignment worsens past a threshold of approximately 0.59, these gains vanish and can fall as low as -6.3% in extreme scenarios.
Tan cautions against broad restrictions on stablecoins, warning that such measures could harm unbanked households by removing low-cost access to dollars. Still, he emphasizes that robust macroeconomic policy remains crucial. He advocates for a flexible strategy that maintains stablecoin access during calm times, while allowing authorities to impose targeted controls on large or run-like flows only when currency misalignment becomes acute.
The model suggests a state-contingent approach: preserve low-cost access in normal conditions, but introduce temporary, targeted restrictions on large flows during periods of high misalignment.
While working papers represent the author’s views and not the IMF’s official stance, these findings are likely to influence ongoing regulatory discussions as policymakers consider how to design safe and effective frameworks for stablecoin use in vulnerable economies.
