Stablecoin Expansion Raises Concerns of "Cryptification"
In a recent report, international rating agency Moody's stated bluntly that the accelerated adoption of stablecoins globally is posing unprecedented challenges to emerging markets. The report points out that when economic activities are conducted on a large scale using stablecoins, the central bank's ability to regulate the economy through interest rates will be weakened, and the financial system's independence and stability may face potential shocks. Especially if dollar-pegged stablecoins become the mainstream payment medium, it could directly impact the stability of the domestic currency's exchange rate.
Banking System May Face "Deposit Drains"
Moody's emphasizes that the popularization of stablecoins is not just a change in payment methods; it could also destabilize the traditional banking system. If the public transfers savings from local bank accounts to stablecoin wallets or crypto accounts, banks may experience "deposit drains." Such outflows could impact liquidity and credit supply, thereby posing a systemic threat to the entire financial system.
Data shows that by 2024, the number of global digital asset users surpassed 562 million, a 33% increase compared to the previous year. The growth is particularly rapid in emerging markets such as Latin America, Southeast Asia, and Africa, mainly driven by cross-border remittances, mobile payments, and hedging against inflation.
"Cryptification" Risks Target Monetary Policy Independence
Moody's report outlines that the greatest risk of the "cryptification" wave is the erosion of monetary policy independence. Once the central bank's role in regulating the economy through interest rates diminishes, the tools available to combat inflation or recession will become limited. Moreover, the prevalence of dollar stablecoins could weaken the status of the local currency, increase devaluation pressures, and complicate policy-making.
Meanwhile, stablecoins are not without their own risks. Moody's warns that if market participants doubt their reserves, it could trigger large-scale run-offs leading to de-anchoring events. Without effective regulation, this may ultimately force governments to deploy fiscal resources for bailouts, creating new financial burdens.
Regulatory Lag and Regional Differences Amplify Risks
The report also highlights the obvious regional imbalances in the expansion of global crypto assets. In developed economies, the spread is more investment-driven, whereas in emerging markets, the use of cryptocurrencies is more due to practical needs. However, currently, only about one-third of countries have established relatively complete regulatory frameworks, with most emerging markets still exposed to policy gaps and volatility risks.
This regulatory gap and differences in growth models mean that while emerging markets benefit from the financial inclusion brought by crypto assets, they are also accumulating potential financial instability risks.
Outlook and Caution
Moody's advises that central banks in emerging markets need to expedite their research on digital currency regulatory frameworks to avoid over-reliance on foreign stablecoins. Some countries have started exploring central bank digital currencies (CBDC) as an alternative, aiming to maintain the core position of monetary sovereignty. However, in the short term, the proliferation of stablecoins is expected to continue spreading in certain economies, posing further policy and market challenges.
