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The International Monetary Fund (IMF) has stated that stablecoins come with inherent risks in the financial sector for weaker economies. The latest caution was shared on the IMF’s official X page to highlight the attendant risks associated with the use of stablecoins.
IMF warns of currency substitution and capital flight
Notably, the IMF has expressed concerns over macro-level risks with the increasing adoption of stablecoins. The global financial institution expressed fears that if people prefer dollar-pegged stablecoins to local currencies, then Central Banks could lose control.
The IMF argues that stablecoins could quietly replace national currencies, especially in countries with inflation challenges and weak institutions. It also opined that stablecoins could cause capital flight and volatility. According to the IMF, if money leaves a country fast and in large volumes, this might trigger economic instability.
Another risk that stablecoins pose, as stated by the International Monetary Fund, is that they lack proper regulation. The IMF observed that there is a need for clear regulatory and legal oversight. The financial institution questioned who regulates global stablecoin and what happens when jurisdictions clash.
Closely related to these concerns are fears about the use of stablecoins in illicit transactions. The IMF flagged the weak Know-Your-Customer arrangements with stablecoins and operational failures that this could cause for the financial system.
Stablecoin growth potential acknowledged
Despite these risks and concerns from the global financial institution, it acknowledged that stablecoins are too big to ignore. The IMF stated that stablecoins have the potential to reshape cross-border payments and capital flows.
The financial institution even expects future growth beyond crypto trading, especially if the right laws and regulations allow wider use. They admit that stablecoins could make international transfers cheaper, faster and more competitive.
In essence, the IMF is stating that while the stablecoin sector of the cryptocurrency market has gained traction, and governments need to control it. They opine that failure of clear regulatory oversight and legal frameworks could weaken national currencies in poorer countries.
The European Union (EU) Systematic Risk Board (ESRB) in September 2025 had stated that it was in favor of banning multi-issuance stablecoins. The ESRB claimed it could undermine the euro as a currency, a position that aligns with the identified risk by the IMF.
In the crypto community, Ripple President Monica Long has stated that the industry is entering an era where stablecoins will play a pivotal role. Long predicts that the asset will be integrated into the system of financial providers, as stablecoins will be the foundation of global settlements.
She forecasts that by the end of 2026, approximately 50% of Fortune 500 companies will have crypto exposure that includes stablecoins.
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