Stablecoin in an era of dedollarisation

The emergence of stablecoin (SC) has notable implications for currencies and payment systems, but the technology is unlikely to capture substantial market share from fiat currencies like the US dollar. Indeed, rather than undermining the $US, the rise of SC could reinforce the currency’s global role.

SCs offer faster and more efficient settlement than traditional systems, but a lack of interest accrual limits their potential to displace fiat. As tokenisation of bank deposits and money market funds (MMFs) accelerates, the non-interest-bearing design of most SCs constrains the technology’s competitiveness.

Passed in July, the US GENIUS Act has established a comprehensive regulatory framework for payment SCs in that market. It requires SCs to be fully backed by liquid and secure assets on a one-to-one basis, prohibits the payment of interest and introduces a system for supervisory and regulatory oversight. In this way, greater SC adoption could reinforce the role of the US dollar by lifting demand for those assets like US treasuries or cash equivalents.

In addition, SCs could also give offshore investors, especially in emerging markets, access to $US they might not otherwise enjoy. In many ways this development challenges growing de-dollarisation narratives, underscoring the $US’s centrality in global payments.

Growth

The value of stablecoins has grown to more than 1 per cent of the US M2 money supply during the past five years. The sector is valued at around $US250 billion.

The GENIUS Act’s implementation is expected to result in significant growth in issuance in SCs, by enhancing safety and reliability. It will broaden global access to the $US and likely increase demand for US Treasury bills, especially short-dated bills, which serve as reserve assets for SCs.

SCs may enable individuals abroad to obtain $US-backed assets without relying on traditional banks or payment systems, particularly in markets with unstable currencies, insufficiently regulated banking systems or restrictive capital controls. This could be a way to ‘dollarise’ without holding $US assets outright.

By holding Treasury bills and offering offshore investors access to $US, SCs have the potential to deepen the $US’s penetration in international finance.

Designed

Most SCs are issued in $US. Unlike central bank digital currencies (like e-CNY) which are official digital forms of fiat currencies, SCs are privately issued.

While designed to maintain a stable value relative to fiat currencies, SCs are issued by private entities and operate outside the traditional banking system. In many ways they align more closely with money market funds or tokenized deposits than with legal tender.

According to the International Monetary Fund, SCs “share some features with money market funds and with ‘narrow banking’”, and are often used as vehicles for speculative investment or as intermediaries in crypto transactions, rather than as a primary medium of exchange.

The European Central Bank has said SCs are typically used within the crypto ecosystem and pose risks to financial stability due to their potential deviation from parity and exposure to runs, especially under stress.

The speed at which SCs can be converted to cash, and whether this occurs on a par with the fiat currency, is important to consider. Transaction costs associated with liquidating SCs are also a critical factor. It is challenging to establish a direct equivalence between SCs and fiat currencies.

An SC issuer is usually a non-bank institution which, during periods of market stress, may be unable to satisfy redemption requests. SCs do not have access to the US Federal Reserve’s discount window available to depository institutions like commercial banks, which are regulated and insured.

Additionally, SCs issued since the post-Genius Act may increase demand for US government debt, particularly at the short end of the yield curve. In the event of significant redemptions by large SCs, there could be a rapid sale of Treasury bills, which has the potential to affect broader financial stability, and therefore other SCs.

This may not be an issue at present, given the market cap of SCs is quite small and less than half the collateral of USDC and USDT is in Treasury bills, but could become an issue if the SC market grows.

Singleness

Based on current characteristics, ANZ Research does not think SCs will take significant market share from established forms of money, because they do not possess the property of ‘singleness’. Singleness describes the characteristic of money that maintains a 1:1 value with central bank money. This applies to cash and bank deposits, such as $US deposits issued by commercial banks.

Several factors contribute to singleness, including par convertibility, deposit insurance provided up to a certain amount by the regulator, and lender-of-last-resort (LLR) facilities provided by central banks where deposits are held, among other things.

Eurodollar deposits and MMFs have less money singleness than onshore bank deposits. They are not insured, and access to a LLR facility is limited. SCs have even less singleness than MMFs and do not have direct access to payment and settlement systems.

However, unlike MMFs, SCs are too small to pose a systemic risk and therefore would be unlikely to elicit Fed support at times of market stress, at their present volumes. Lack of singleness is seen through the USDT’s and USDC’s very frequent deviation from par.

Neither cryptocurrencies nor the growth of SCs has caused a noticeable decrease in the use of traditional money, such as cash or bank deposits, including cash held in MMFs. SCs main advantage is their speed of settlement processes and their access to decentralised finance platforms. As it stands, SCs are likely to remain a niche form of money.

Still, traditional finance is catching up. Banks and other big financial institutions are starting to adopt the same kind of blockchain and digital tech that SCs use. Tokenisation of bank deposits or MMFs is likely to gather pace and could be used like SCs but with more trust and the ability to earn returns. Since SCs cannot pay interest, it is unclear whether they could withstand competition from tokenised bank deposits.

Mahjabeen Zaman is Head of FX Research at ANZ Institutional

This is an edited version of the ANZ Research report “Stablecoins: implications for the USD”, published October 21, 2025.