Could Stablecoins Reinforce the US Dollar’s Global Dominance?

Stablecoins, which are pegged to the US dollar, may become pivotal in reinforcing the dollar's global dominance, according to recent insights from the Atlantic Council.

Despite the stablecoin market’s relatively modest size of $227 billion compared to the $6.22 trillion US capital markets, analysts believe that rapid growth could eventually make stablecoins a major force in both the crypto market and the broader economy.

The analysts from the Council point out that, unlike traditional forms of currency, stablecoins could increasingly influence shifts in the global reserve currency landscape.

As more transactions are conducted through these dollar-backed digital assets, they could help stabilize or even reverse the ongoing decline in the dollar’s share of global reserves, which has dropped significantly since 2001.

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With decision-making in the coming years likely to shape the future of stablecoin adoption and the dollar’s place in international markets, the implications for global finance are significant, especially as policymakers work to address de-dollarization trends.

Alexander Stefanov