{
  "title": "Stablecoins and Fragility in Fixed Exchange Rate Regimes",
  "publication": "IMF Working Papers, July 10, 2026",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641",
  "overlayPath": "/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641/index.md",
  "summary": "This paper studies how dollar stablecoins affect parallel foreign-exchange markets in economies with fixed or heavily managed exchange rates. When foreign currency is rationed, the true degree of exchange-rate misalignment is not directly observed.",
  "sections": [
    {
      "heading": "Summary and research question",
      "content": "- Examines how dollar stablecoins affect parallel foreign-exchange markets in economies with fixed or heavily managed exchange rates.\n- Focuses on environments where foreign currency is rationed and the true degree of exchange-rate misalignment is not directly observed.\n- 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."
    },
    {
      "heading": "Model and mechanism",
      "content": "- Builds a global-games model in which:\n  - Households observe dispersed private signals about misalignment.\n  - Stablecoin market depth determines the precision of a common public signal.\n- Key mechanism: stablecoins both expand access to dollar-like claims and generate a public price that coordinates beliefs and actions."
    },
    {
      "heading": "Main findings (state-dependent welfare effects)",
      "content": "- Stablecoins generate a state-dependent welfare effect.\n- Access and allocation:\n  - Stablecoins expand access to foreign-currency.\n  - Stablecoins can improve allocation by making beliefs about misalignment more informative.\n- Coordination externality and runs:\n  - The public stablecoin price can coordinate runs by making beliefs and actions more synchronized.\n  - When misalignment is low, access and allocation gains dominate, so stablecoins raise welfare.\n  - 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."
    },
    {
      "heading": "Policy implications and recommended approach",
      "content": "- Points to a state-contingent approach:\n  - Preserve low-cost access in normal states.\n  - Use temporary, targeted measures to manage large or run-like flows when misalignment is high.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641/bundle-manifest.json)",
    "Authors: Brandon Joel Tan",
    "Published: July 10, 2026",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229053723.001",
    "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:",
    "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:",
    "Coordination externality and runs:",
    "Points to a state-contingent approach:",
    "**Working Paper**"
  ],
  "related": [
    {
      "title": "Working Paper",
      "role": "paper",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2026/english/wpiea2026144.pdf",
      "summary": {
        "path": "/-/media/files/publications/wp/2026/english/wpiea2026144.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/wp/2026/english/wpiea2026144.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641/index.md",
    "json": "/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641/index.json",
    "bundleManifest": "/en/publications/wp/issues/2026/07/10/stablecoins-and-fragility-in-fixed-exchange-rate-regimes-577641/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-17T03:43:23.831Z"
}