The International Monetary Fund (IMF) has released a stablecoin-related paper.
IMF Highlights How Stablecoins Work, Key Trends And Risks
The publication called ‘Understanding Stablecoins’ prepared by a large team of contributors at IMF has attempted to give a holistic overview of how stablecoins work, the inherent risks associated, as well as the trajectory of current and future stablecoin impact.
Here are the key trends and points to note from their executive summary:
- The large majority of currently existing stablecoins is denominated in United States dollars.
- Stablecoins could increase efficiency in payments – pariticularly cross-border transactions, including by reducing the costs and enhancing the speed of remittances.
- Stablecoins value can fluctuate due to the market and liquidity risks of their reserve assets.
- Stablecoins may contribute to currency substitution, increase capital controls, and fragment payment systems unless interoperability is ensured.
- Many authorities have started implementing international standards for stablecoins, but the landscape remains fragmented.
The report is certainly more geared towards fully breaking down the inherent risk of fiat-backed stablecoins, with a large focus on the mitigation of technical, sovereign and institutional risks.
More specifically, within this critique was a useful mention of the fragmented regulatory guidance and back-end design on reserve holdings and redemption procedures in some but not all of the jurisdictions, including the U.S, UK, EU, and Japan (page 41).
Stablecoin Benefits, Stablecoin Deposits And Forex
On the benefits side (page 22), there is an attempt made to mention the data storage improvement of the underlying technology and greater accessibility (i.e. serving the underbanked), as well as contributing to fintech and UI/UX innovation.
Ultimately, little attempt was made to include some of the more updated case studies from the industry and data aggregators on specific B2B, retail or merchant adoption across the Global North and South.
Also, one of the more interesting aspects of the report was a section attributed to identifying the impact of stablecoins as a % of physical cash deposits held in contrast to FX deposits for certain developing regions.
Stablecoin holdings in Africa and the Middle East and Latin America and the Caribbean remain small relative to both FX deposits and total deposits but are rising rapidly (Figure 8).”
Figure 8. Stablecoin Holdings Relative to Deposits (IMF, Understanding Stablecoins, 2025).
In nearly all regions mentioned (Africa and Middle East; Asia and Pacific; Europe; Latin America and Caribbean) there is an underlying increased rate of adoption as stablecoins continue to chase the larger FX/total deposit ratio.
