Stablecoins and Fragility in Fixed Exchange Rate Regimes

IMF Working Papers, July 10, 2026

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Examines how dollar stablecoins affect parallel foreign-exchange markets in economies with fixed or heavily managed exchange rates.
Focuses on environments where foreign currency is rationed and the true degree of exchange-rate misalignment is not directly observed.
Contrasts traditional parallel markets—where information is dispersed across bilateral and often private trading opportunities—with stablecoin markets that create a visible, high-frequency price aggregating order flow in a common venue.

Builds a global-games model in which:
- Households observe dispersed private signals about misalignment.
- Stablecoin market depth determines the precision of a common public signal.
Key mechanism: stablecoins both expand access to dollar-like claims and generate a public price that coordinates beliefs and actions.

Stablecoins generate a state-dependent welfare effect.
Access and allocation:
- Stablecoins expand access to foreign-currency.
- Stablecoins can improve allocation by making beliefs about misalignment more informative.
Coordination externality and runs:
- The public stablecoin price can coordinate runs by making beliefs and actions more synchronized.
- When misalignment is low, access and allocation gains dominate, so stablecoins raise welfare.
- When misalignment is high, the coordination externality can become more costly: a more precise public signal compresses belief dispersion, strengthens coordinated exit incentives, and can overturn the access benefit.

Points to a state-contingent approach:
- Preserve low-cost access in normal states.
- Use temporary, targeted measures to manage large or run-like flows when misalignment is high.