New Frontiers for Digital Finance

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Digital finance continues to expand its reach in 2026, driven by stablecoins, digital payments, central bank digital currencies (CBDCs), and tokenization.
After years of development and experimentation, governments in major jurisdictions and financial sector entities are institutionalizing blockchain/distributed ledger–powered technologies.
The dataset “Selected Stablecoin Market Capitalization (Billions of US dollars)” (Figure 1.2) provides daily market capitalization series for USDT, USDC, and "Other" stablecoins covering Jan 1, 2020 through Oct 3, 2025.

Stablecoins have experienced robust growth and expanded use in cross-border payments and remittances, though overall use in those flows is still described as small.
Issuers of the currencies in which stablecoins are denominated—primarily the US today—can benefit from increased demand and liquidity for government debt.
The two largest stablecoin issuers together now hold more US Treasury bills than Saudi Arabia.
Risks identified:
- Stablecoins can become unstable if their underlying assets lose value or if users lose confidence in them.
- Large redemptions could pose a risk to markets for the government bonds held by stablecoin issuers.
- Policymakers are concerned about financial stability, currency substitution (for example, dollarization), and financial integrity.

Tokenization—recording and transferring assets on a widely shared and trusted programmable digital ledger—is moving toward commercial deployment but remains in its infancy.
Potential long-term impacts:
- Tokenizing both physical and financial assets (everything from land ownership to loans) could speed transactions, reduce cost, and make more assets available to more people worldwide.
Risks noted:
- Tokens could speed transactions too much, causing “flash crashes,” where asset valuations swing widely and too fast for humans to intervene.

Many members continue to develop CBDCs to capture benefits of digitalization while addressing associated risks.
The European Central Bank concluded the preparation phase for a digital euro in October 2025, laying the technical foundations for issuing a digital currency.
Maintaining their own currency via CBDCs helps countries preserve the ability to use monetary policy tools and supports efforts to guard against money laundering and terrorism financing.

Asia has long been a leader in digital finance, with widespread digital payments and mobile money where many people have mobile phones but not bank accounts.
Proactive government regulations and regional payment standards—particularly in ASEAN—have supported advanced fintech ecosystems.
Asia is an important testing ground for digital payment systems such as stablecoins and for efforts to lower cross-border payment costs and improve financial access for underbanked people.

The IMF advocates coherent global regulatory frameworks for digital finance, including:
- Managing stablecoin risks based on IMF, Financial Stability Board, and Bank for International Settlements recommendations.
- Making payment systems interoperable.
- Sharing knowledge to help members guard against capital flow volatility and preserve exchange rate management when conditions are disorderly.
The IMF has added chapters to its detailed CBDC Virtual Handbook exploring issues from financial stability to tokenizing reserves.

Figure 1.2: Selected Stablecoin Market Capitalization (Billions of US dollars) — series provided for USDT, USDC, and "Other".
Time references:
- Jan 1, 2020 — beginning of the stablecoin market capitalization time series.
- Oct 3, 2025 — latest date in the provided stablecoin market capitalization series.
- October 2025 — European Central Bank concluded the preparation phase for a digital euro.
Assertion: The two largest stablecoin issuers together now hold more US Treasury bills than Saudi Arabia.