Dollar stablecoins could improve FX access but amplify currency runs: IMF paper

60-second summary

The IMF working paper reveals that dollar stablecoins can enhance access to foreign currency, potentially benefiting emerging markets, with 34% of countries experiencing exchange-rate stress in 2022. However, this increased access may also facilitate coordinated exits from local currencies during periods of severe exchange-rate stress, amplifying currency runs and exacerbating economic instability.