IMF official warns local stablecoins may boost digital dollar use
IMF first deputy managing director Dan Katz said domestic-currency stablecoins intended to reduce reliance on dollar-backed tokens could instead make it easier for users to move funds into digital dollars once local and dollar tokens operate on the same blockchain. Katz said conversions could occur via decentralized exchanges, liquidity pools or peer-to-peer swaps, which may shift foreign exchange activity away from banks and currency dealers and reduce monitoring tools for authorities. He noted risks vary by country, cited South Africa's weak demand for rand tokens, and urged that onramps, offramps and onchain exchange points be placed within regulatory frameworks.
Local stablecoins can enable easier conversion into dollar-backed tokens
Context
An IMF official spoke at the University of Cape Town about stablecoins. He warned that shared blockchains let users swap tokens onchain. Authorities may next seek clearer rules for onramps and offramps.
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