27-9-2025 – Moody’s Ratings has issued a stark warning about the rapid rise of stablecoins in emerging markets, highlighting risks to monetary sovereignty and financial stability. The September 25 report notes that these digital assets, often pegged to the U.S. dollar, are increasingly used for remittances, mobile payments, and inflation hedging in regions like Latin America, Southeast Asia, and Africa, where local currencies face volatility.
This trend, dubbed “crypto-ization,” could undermine central banks’ ability to manage interest rates and exchange rates, Moody’s cautions. As individuals shift savings from traditional bank deposits to stablecoins or crypto wallets, banks may face deposit erosion, increasing systemic risks. The report underscores that fewer than one-third of countries have comprehensive digital asset regulations, leaving many economies vulnerable to shocks, such as reserve runs or costly bailouts if stablecoin pegs fail.
The Bank of Canada echoed these concerns, urging swift regulatory action. While emerging markets drive adoption out of necessity, advanced economies like the EU, U.S., and China are tightening oversight. The EU’s MiCA regime, fully implemented in December 2024, and the U.S.’s GENIUS Act, enacted in July, set strict standards for stablecoin issuers.
China is exploring yuan-backed stablecoins, signaling a shift from its 2021 crypto ban. However, fragmented global regulations exacerbate risks, potentially deepening economic disparities.
