The United States' vigorous promotion of stablecoin development is sparking collective vigilance among global central bank officials. Multiple top financial policymakers warn that the rapid expansion of USD-denominated stablecoins will exacerbate the risk of dollarization in emerging economies, undermining their monetary sovereignty and capital control capabilities while facilitating criminal activities such as money laundering and tax evasion.
Pablo Hernández de Cos, Governor of the Bank for International Settlements (BIS), stated in a speech delivered on Monday in Japan that stablecoins &#34;pose serious risks to financial integrity and may encourage regulatory arbitrage,&#34; warning that their rapid adoption would make it harder for emerging markets and developing countries to maintain capital controls.
Bank of England Governor Bailey also remarked in Washington that the extent of stablecoin penetration as a substitute for domestic currencies warrants high concern, noting that progress in establishing international regulatory frameworks for stablecoins has noticeably slowed.
Amid these warnings, the global stablecoin market has reached $315 billion, approximately 98% of which is denominated in USD. The Trump administration's active endorsement of digital assets, along with the Genius Act passed by the US Congress last year, is providing institutional support for further expansion of this market.
<h2>Emerging Markets Face Monetary Sovereignty Threats</h2>
The impact of stablecoins on emerging markets has become a key topic discussed by multiple senior officials during last week's annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington.
Tobias Adrian, Director of the IMF's Monetary and Capital Markets Department, told the UK Financial Times that in some emerging market countries, USD stablecoins already account for &#34;a significant share of payment volumes, including cross-border payments.&#34; While acknowledging the advantages of stablecoins in cross-border transactions—such as speed and lower costs—he pointed out: &#34;The biggest challenge is dollarization. For central banks, this could pose a threat to monetary sovereignty.&#34;
Pablo Hernández de Cos further emphasized that the widespread use of stablecoins will intensify dollarization risks in emerging markets and provide new channels for evading capital controls. Citing estimated data, he noted that stablecoins currently account for the majority of illicit transactions within the crypto ecosystem, and their increasingly broad usage &#34;opens new avenues for tax evasion.&#34;
Reza Baqir, former Governor of the State Bank of Pakistan and now at consulting firm Alvarez &amp; Marsal, stated: &#34;Anything that could affect capital controls causes me extreme concern.&#34;
<h2>Rapid Penetration of Stablecoins in Emerging Markets</h2>
The momentum of stablecoin expansion in emerging markets cannot be ignored. An increasing number of residents in these regions are using USD stablecoins as tools to hedge against local currency depreciation, circumvent high inflation, and bypass international payment restrictions.
Standard Chartered analysts estimate that USD stablecoin savings held by residents in emerging markets could grow from $173 billion at the end of last year to $1.22 trillion by the end of 2028—though even then, they would represent only about 2% of total bank deposits in these countries.
Standard Chartered expects the strongest growth to concentrate in countries that have recently experienced balance-of-payments crises or are under IMF stabilization programs, including Egypt, Pakistan, and Bangladesh.
<h2>Slow Progress in Regulatory Rulemaking</h2>
Facing the rapid expansion of stablecoins, global regulatory coordination has lagged behind. Financial Stability Board Chairman and Bank of England Governor Bailey admitted that the pace of establishing unified international rules for stablecoins has slowed. &#34;If you had asked me a year ago, I would have said we were moving quickly. But I believe this is an issue we must address soon.&#34;
Meanwhile, the Financial Action Task Force (FATF), the global anti-money laundering body, released a report in March warning that stablecoins &#34;are attractive to criminals,&#34; with virtual currencies increasingly becoming the preferred method for laundering proceeds from ransomware, phishing, and other cybercrimes.
Responses vary across countries. Brazil has revised its legislation to include stablecoin providers under bank anti-money laundering compliance requirements and imposed limits of $100,000 on many cross-border transfers.
Dan Katz, former US Treasury staff member at the IMF and current Deputy Managing Director of the IMF, holds a relatively optimistic view, suggesting that stablecoins can enhance competition and reduce costs in the payments sector. He argued that countries could counter rising dollarization pressures by &#34;improving their macroeconomic frameworks.&#34;
As a forum for numerous central banks worldwide, the BIS has long maintained a cautious stance toward stablecoins. Last year, the BIS noted that such new forms of digital cash performed poorly against key criteria required to qualify as true currency.

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The global stablecoin market has reached $315 billion, with 98% denominated in USD. Under US legislative endorsement, this wave of digital dollarization has triggered collective alarm among central banks worldwide—BIS Governor and Bank of England Governor have issued warnings that the rapid penetration of USD-backed stablecoins into emerging markets is eroding monetary sovereignty, undermining capital controls, and opening backdoors for money laundering and tax evasion. Standard Chartered forecasts that holdings in emerging markets could surge to $1.22 trillion by 2028

- The U.S. is actively promoting the development of stablecoins, raising concerns among global central bank officials regarding increased risks of "dollarization" in emerging markets.  
- Key financial policymakers warn that the rapid expansion of dollar-denominated stablecoins threatens monetary sovereignty and facilitates illicit activities, with the global stablecoin market reaching $315 billion.  
- Despite the challenges posed by stablecoins, some experts argue they can enhance payment efficiencies, emphasizing the need for improved regulatory frameworks to mitigate dollarization risks.

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Global Central Bank Officials Warn: US Push for Stablecoins Accelerates Dollarization, Threatening Emerging Markets