FSB warns dollar stablecoins could strain emerging-market policy

The Financial Stability Board (FSB) says the spread of foreign-currency stablecoins—especially dollar stablecoins—may weaken emerging markets’ financial stability. In its 2025 annual report, the FSB warns that cross-border use of dollar stablecoins can create “potentially more acute” risks for developing economies. The FSB links the risk to currency substitution and reduced reliance on local payment systems. It also argues that stablecoin flows across multiple jurisdictions can weaken domestic monetary policy effectiveness and add fiscal pressure. Regulators, meanwhile, still face gaps in implementing the FSB’s 2023 global framework for crypto-asset activity and stablecoin arrangements. The report highlights ongoing vulnerabilities around liquidity monitoring, operational risk, and connections between stablecoin operators and the wider financial system. Even with market growth, the FSB says crypto-assets and stablecoins remain limited in real-economy financial services, including payments. For traders, the key takeaway is policy and compliance risk: tighter scrutiny of dollar stablecoins could raise uncertainty, limit adoption in higher-risk jurisdictions, and affect liquidity and risk sentiment. Looking ahead, the FSB plans continued work into 2026 on monitoring stablecoin vulnerabilities and broader financial-resilience risks, including cross-border payments, crisis preparedness, private credit, and nonbank financial intermediation.