IMF Says Stablecoins Threaten Central Bank Control

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The International Monetary Fund (IMF) has warned that increased adoption of stablecoins could weaken central banks’ control over monetary policy and threaten countries’ financial sovereignty.

While the adoption of stablecoins makes payments faster and cheaper for people, it “reduces the ability of a country’s central bank to control its monetary policy and act as a lender of last resort.” The International Monetary Fund said in a Blog post Which highlighted the findings of a 56-page report on the topic.

Also comes the promise of stablecoins She added that with the risk of “countries losing control over capital flows.”

Stablecoins can ‘rapidly penetrate the economy’

Historically, investors who wanted to hold US dollars, or any other fiat currency besides their country’s currency, had to hold cash or open specific bank accounts.

But stablecoins enable anyone to access the underlying assets they represent on-chain, something the IMF said enables cryptocurrencies to “rapidly penetrate the economy via the Internet and smartphones.”

The cross-border nature of stablecoins can simplify remittances and payments, but also complicate monetary policy and financial stability in emerging markets. A new IMF report explores the challenges and opportunities. https://t.co/eVss5tPsFn pic.twitter.com/ERq3MwxPTz

– International Monetary Fund (IMFNews) December 4, 2025

“The use of foreign currency-denominated stablecoins, especially in cross-border contexts, could lead to currency substitution and potentially undermine monetary sovereignty, especially in the presence of unhosted wallets,” the IMF said.

She cited citizens in regions such as Africa, the Middle East, Latin America and the Caribbean, who are increasingly keeping their money in stable currencies rather than local bank accounts in foreign currencies. This is often because She added that concerns about financial instability and even survival.

The IMF also said that it has become difficult for central banks to guide their country’s monetary policy due to the unavailability of accurate data from local foreign currency accounts.

CBDCs have a hard time competing with stablecoins

Given the fact that stablecoins operate on a distributed ledger and there is no need for a central third party to process and validate transactions, the central bank will have little control if adoption and use of stablecoins continues to rise.

In an attempt to regain some of the control lost to stablecoins, several central banks have proposed creating their own digital currencies (CBDCs). These tokens are similar to stablecoins, but are issued and held via a central bank. This means that the central bank will also be able to better monitor and restrict transaction activity.

But the IMF has warned that if foreign currency-denominated stablecoins become entrenched through payments services, local alternatives such as central bank digital currencies will find it difficult to compete.

US dollar stablecoins dominate the market

The stablecoin market has grown to about $316 billion this year, according to CoinMarketCap.

It gained momentum after US President Donald Trump signed the GENIUS Act into law, providing regulatory clarity in the US for the first time.

This clarity has sparked a stablecoin craze, with many major traditional financial companies launching their own tokens.

Currently, stablecoins pegged to the US dollar account for more than 90% of the market. Leading this sector are USDT from Tether and USDC from Circle. Combined, these two stablecoins are worth more than $250 billion, data from CoinMarketCap shows.

Top stablecoins by market cap (Source: CoinMarketCap)

With the rise of stablecoins and the dominance of currencies linked to the US dollar, the European Central Bank (ECB) recently pointed out the potential risks to the continued growth of these cryptocurrencies.

“Significant growth in stablecoins could cause retail deposit outflows, reducing an important source of funding for banks and leaving them with more volatile financing overall,” the ECB said.

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