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An IMF working paper says dollar stablecoins can improve access to foreign currency but may also help coordinate exits from local currencies during periods of severe exchange-rate stress.<\/p>\n
Dollar stablecoins could improve access to foreign currency in economies with fixed or heavily managed exchange rates, but may also amplify currency runs when pressure on the domestic currency becomes severe, according to a new paper published by the International Monetary Fund (IMF). <\/p>\n
The findings come from a working paper by economist Brandon Joel Tan. Titled \u201cStablecoins and Fragility in Fixed Exchange Rate Regimes,\u201d the paper modeled<\/a> how stablecoins affect parallel foreign-exchange (FX) markets when official dollar access is rationed. <\/p>\n The findings highlight that stablecoins can help people get access to dollars when banks or official exchange channels cannot meet demand. However, during a currency crisis, the same widely watched stablecoin price could prompt many people to abandon the local currency simultaneously, suggesting that regulators may need temporary limits on unusually large or panic-driven transactions. <\/p>\n Read more<\/p>\n<\/p>\n If you liked the article, do not forget to share it with your friends. Follow us on\u00a0Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n If you want to read more News<\/a> articles, you can visit our General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n\n