The IMF has shared a strong view about stablecoins and how they may not help in opening finance for everyone. The idea of crypto was to give people more power and more choice. But the IMF says stablecoins are doing the opposite. They say most of the control sits with a few big private firms. This means people still depend on big companies instead of open systems.
A report by Professor Eswar Prasad explains this clearly. He says that stablecoins help the world of digital finance grow but they do not follow the idea of real decentralization. Real decentralization is when trust comes from open code and not from a company. Stablecoins depend on trust in the company that creates them. So users must believe that the company will handle their money in a fair and honest way. This goes against the idea of open trust that crypto tries to support.
Right now most of the stablecoin market is backed by the United States dollar. The supply is huge and almost the entire market is made up of dollar based coins. This gives even more power to the dollar in global money flow. Euro based stablecoins are rising and could reach one billion in the next year but still the gap is very wide.
This heavy focus on the dollar may create new problems. Other big currencies like the euro and the yen may lose space. Developing countries with weak or fast falling currencies may also see money move away from their local systems. People in these places want safety so they choose a strong digital coin backed by a strong currency. This can lead to fast money outflow. One bank study says these outflows from developing markets could reach one trillion. That is a huge shift and can shake local finance.
Some places are already working to protect their currencies. The euro area is working on its own digital coin idea. China is also moving on its digital coin plan. They want to stop more power from moving to the dollar.
On the other side some people do not agree with the IMF. One leader from a yen based stablecoin in Japan says that users have direct control through self wallets. He says there is no middle man and no company can take funds on its own. He believes this gives more power to users not less.
The stablecoin world is still growing. One major push came when new rules came out in the United States. These rules gave clear steps for stablecoin firms and this helped the market grow past three hundred billion in supply for the first time. From July to September stablecoins saw strong inflows each month. In November the market fell but in December the mood turned positive again.
In the end the IMF says stablecoins are useful but also risky. They may give more rise to the dollar and more trust issues if one or two big firms hold too much control. Still inflows show that people are using stablecoins more and the activity in this space is rising again.
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