How Stablecoins Are Fuelling the Global Shift to Dollarisation
Stablecoins have quietly become a dominant force in the cryptocurrency market, blending the flexibility of digital assets with the stability of traditional fiat currencies.
Stablecoins have quietly become a dominant force in the cryptocurrency market, blending the flexibility of digital assets with the stability of traditional fiat currencies. Unlike volatile cryptocurrencies, stablecoins maintain a predictable value, typically pegged 1:1 to fiat currencies such as the U.S. dollar. With adoption skyrocketing—usage is up 84% since August 2023, reaching a peak of $224 billion—stablecoins are reshaping global finance in ways that extend far beyond the crypto ecosystem. One of the most profound implications is their role in accelerating the dollarization of economies, especially in emerging markets. But why are stablecoins fueling this shift, and what are the broader economic consequences?
The Dollarization Effect
It is striking that nearly 99% of stablecoins, measured by market capitalization, are denominated in U.S. dollars—an astonishingly high share compared to traditional international trade and finance. This suggests that if monetary institutions were bu…