The Impact of Stablecoins on U.S. Dollar Dominance: Evidence from Emerging Market Economies

Research Article
Open access

The Impact of Stablecoins on U.S. Dollar Dominance: Evidence from Emerging Market Economies

Shuoshuo Bian 1*
  • 1 Management School, University of Sheffield, Sheffield, UK    
  • *corresponding author sbian9@sheffield.ac.uk
AEMPS Vol.186
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-153-2
ISBN (Online): 978-1-80590-154-9

Abstract

This paper explores the role of stablecoins in challenging the dominance of the US dollar, especially in emerging market economies. This paper examines the defining characteristics of stablecoins, classifies their mechanisms, and analyzes the growing appeal of stablecoins in the context of currency instability and limited access to dollars. Using recent examples from Argentina, Egypt, and Brazil, the paper highlights how stablecoins can bypass the traditional financial system and provide an alternative to store of value and cross-border transactions. While stablecoins enhance financial inclusion and payment efficiency, they also raise concerns about regulatory gaps, transparency issues, and the potential erosion of national monetary sovereignty. This paper further explores how the widespread adoption of stablecoins is exacerbating the dollarization of emerging economies, thereby undermining the effectiveness of independent monetary policy. By reviewing existing literature and real-world case studies, the paper concludes that while stablecoins may promote innovation and efficiency, their unfettered use could undermine financial stability unless a sound regulatory framework is in place. The future of stablecoins therefore depends on balancing financial innovation with effective regulation to ensure that they contribute positively to the evolving global financial architecture.

Keywords:

Stablecoins, Dollar Dominance, Emerging Market Economies, Cross-Border Payments

Bian,S. (2025). The Impact of Stablecoins on U.S. Dollar Dominance: Evidence from Emerging Market Economies. Advances in Economics, Management and Political Sciences,186,43-49.
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References

[1]. Bullmann, D., Klemm, J., & Pinna, A. (2019). In search for stability in crypto-assets: are stablecoins the solution? (No. 230). ECB Occasional Paper.

[2]. Ho, A., Darbha, S., Gorelkina, Y., & Garcia, A. (2022). The relative benefits and risks of stablecoins as a means of payment: A case study perspective.

[3]. Calomiris, C. W. (2024). Will fractional‐reserve stablecoin banking replace bitcoin and some traditional banking payments? Journal of Applied Corporate Finance, 36(1), 24–28.

[4]. Fantacci, L. & Gobbi, L. (2024). Stablecoins, Central Bank Digital Currencies and US Dollar Hegemony: The Geopolitical Stake of Innovations in Money and Payments. Accounting, Economics, and Law: A Convivium, 14(2), 173-200.

[5]. Jin, F., Li, J., & Xue, Y. (2023). Preferring stablecoin over dollar: Evidence from a survey of Ethereum platform traders. Journal of International Money and Finance, 131, 102796.

[6]. Dovonou, V. O. (2024). Trilemma revisited with dollar dominance in trade and finance. The World Economy, 47(1), 122–144.

[7]. Force, E. C. B. (2020). Stablecoins: Implications for monetary policy, financial stability, market infrastructure and payments, and banking supervision in the euro area (No. 247). European Central Bank.

[8]. Bullmann, Dirk and Klemm, Jonas and Pinna, Andrea, In Search for Stability in Crypto-Assets: Are Stablecoins the Solution? (August, 2019).

[9]. Grier, K., & Grier, R. (2024). Economic Freedom or Populist Peril: Lessons for Argentina. DOM, 35.

[10]. Basil Ibrahim Abdo, & Akram Mahmoud Al-Hourani. (2025). A Study of the Possibility of Floating the Exchange Rate of the Syrian Pound. Damascus University Journal of Economic and Political Sciences,41(1).

[11]. Deloitte. (2021). Getting ready for crypto: How merchants can prepare for the future of digital currency. Deloitte.

[12]. Chainalysis. (2021). Latin America cryptocurrency adoption: A look at the trends driving growth. Chainalysis.

[13]. Aslan, M., & Ozgur, O. (2024). Financial dollarization and its effects on inflation and output in Turkey: a machine learning approach. Quality & Quantity, 1-28.

[14]. Castren, O., & Russo, R. (2024). Runs, transparency and regulation: On the optimal design of stablecoin frameworks (No. 18). EBA Staff Paper Series.

[15]. Rangel, N. T. (2024). A centralized cryptocurrency among decentralized cryptocurrencies: an analysis on the viability of the Petro in Venezuela.

Cite this article

Bian,S. (2025). The Impact of Stablecoins on U.S. Dollar Dominance: Evidence from Emerging Market Economies. Advances in Economics, Management and Political Sciences,186,43-49.

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About volume

Volume title: Proceedings of ICMRED 2025 Symposium: Effective Communication as a Powerful Management Tool

ISBN：978-1-80590-153-2(Print) / 978-1-80590-154-9(Online)
Editor：Lukáš Vartiak
Conference website: https://2025.icmred.org/Bratislava.html
Conference date: 30 May 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.186
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Bullmann, D., Klemm, J., & Pinna, A. (2019). In search for stability in crypto-assets: are stablecoins the solution? (No. 230). ECB Occasional Paper.

[2]. Ho, A., Darbha, S., Gorelkina, Y., & Garcia, A. (2022). The relative benefits and risks of stablecoins as a means of payment: A case study perspective.

[3]. Calomiris, C. W. (2024). Will fractional‐reserve stablecoin banking replace bitcoin and some traditional banking payments? Journal of Applied Corporate Finance, 36(1), 24–28.

[4]. Fantacci, L. & Gobbi, L. (2024). Stablecoins, Central Bank Digital Currencies and US Dollar Hegemony: The Geopolitical Stake of Innovations in Money and Payments. Accounting, Economics, and Law: A Convivium, 14(2), 173-200.

[5]. Jin, F., Li, J., & Xue, Y. (2023). Preferring stablecoin over dollar: Evidence from a survey of Ethereum platform traders. Journal of International Money and Finance, 131, 102796.

[6]. Dovonou, V. O. (2024). Trilemma revisited with dollar dominance in trade and finance. The World Economy, 47(1), 122–144.

[7]. Force, E. C. B. (2020). Stablecoins: Implications for monetary policy, financial stability, market infrastructure and payments, and banking supervision in the euro area (No. 247). European Central Bank.

[8]. Bullmann, Dirk and Klemm, Jonas and Pinna, Andrea, In Search for Stability in Crypto-Assets: Are Stablecoins the Solution? (August, 2019).

[9]. Grier, K., & Grier, R. (2024). Economic Freedom or Populist Peril: Lessons for Argentina. DOM, 35.

[10]. Basil Ibrahim Abdo, & Akram Mahmoud Al-Hourani. (2025). A Study of the Possibility of Floating the Exchange Rate of the Syrian Pound. Damascus University Journal of Economic and Political Sciences,41(1).

[11]. Deloitte. (2021). Getting ready for crypto: How merchants can prepare for the future of digital currency. Deloitte.

[12]. Chainalysis. (2021). Latin America cryptocurrency adoption: A look at the trends driving growth. Chainalysis.

[13]. Aslan, M., & Ozgur, O. (2024). Financial dollarization and its effects on inflation and output in Turkey: a machine learning approach. Quality & Quantity, 1-28.

[14]. Castren, O., & Russo, R. (2024). Runs, transparency and regulation: On the optimal design of stablecoin frameworks (No. 18). EBA Staff Paper Series.

[15]. Rangel, N. T. (2024). A centralized cryptocurrency among decentralized cryptocurrencies: an analysis on the viability of the Petro in Venezuela.

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