BIS Finds Dollar Stablecoins Undermine Capital Controls Across 130+ Economies, Posing 'Digital Dollarization' Risk

According to research cited by Odaily, the Bank for International Settlements (BIS) found that dollar stablecoins are creating a new form of "digital dollarization" and are largely insensitive to capital controls in emerging markets. BIS researchers analyzed foreign currency deposit and dollar stablecoin inflows across over 130 economies, discovering that while both increase during macroeconomic stress, stablecoin flows show almost no response to capital controls or foreign exchange restrictions, potentially due to their partial exemption from regulatory oversight. BIS warns that stablecoins may weaken monetary sovereignty, urging policymakers to develop new tools to address financial stability risks.
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