A new paper by the International Monetary Fund (IMF) finds that a stable dollar can increase the amount of money in the economy to prevent deflation, turning the split prices of common markets into a single indicator that allows households to exit at the same time.
IMF researcher Brandon Joel Tan explains the effects of government dependence. Stablecoins bring support in times of calm but increase the risk of a crisis if they are misaligned, the paper argues.
How Stablecoins Turn Scarcity into Public Token
When the government has a value higher than the market, foreign exchange is distributed. Consumers then turn to equality dollar markets.
Those markets remain fragmented. Street traders, brokers, and banks quote different prices, and no single figure shows a real decrease. IMF research shows that stablecoins change this.
Dollar sign as Tether (USDT) trades against local currency on exchange. That price is visible and constantly changing, so it is well known for the same dollar amount.
The availability of better prices helps to keep the housing market moving. However, the same value of people can connect the flow, because everyone does the same number at the same time.
“Stablecoins create the advantage of trust in the government. They increase the access to foreign currency and can improve the distribution system by creating beliefs about misunderstandings, but the same value of people can also coordinate speed by creating beliefs and actions more coherent,” in detail they read.
Bolivia shows change. The central bank lifted monetary restrictions in June 2024. Such activities in the economy doubled from July 2024 to May 2025.
The exchange rate of USDT to Bolivian boliviano is done once a day. The central bank started printing again USDT price online.
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What This Example Shows is What Tan Recommends
Tan compares three countries to differentiate the results. They compare three setups. The first is the stock market. The second is a stablecoin market that only has a limited supply. Thirdly it also increases the value of people.
The average financial crisis is rising from 3.9% for the stablecoin economy to 7.4% for the entire stablecoin economy. In the worst case scenario, it goes from 4.8% to 12.9%.
This difference between the second and third economies is Tan’s main point. A cheap acquisition makes exiting easier to do. Real people’s prices make communication easier, and cooperation drives increased risk.
Welfare presents a two-pronged story. Profits reach around 1.2% during quiet periods. It then turns negative across the negative boundary around 0.59. It reaches -6.3% in the main level.
Therefore, Tan says the main restrictions may be less, as they remove the cost-effective option for unbanked households. Meanwhile, he emphasizes that stablecoin regulations cannot replace economic reform.
“This example shows the government’s strategy: to keep cheap opportunities in good countries, and to use short-term conflicts, focused on large or fast routes when disruptions are high,” he said.
IMF working papers reflect the author’s research, not the organization’s position. However, the analysis adds weight to the life cycle arguing like governments Stablecoin quick updates.
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A note IMF Paper Warns Dollar Stablecoins May Cause Currency Crisis appeared for the first time BeInCrypto.
