Stablecoin Rise May Drain $1 Trillion From Emerging Market Banks
Standard Chartered reports that the rise in stablecoin usage could lead to a withdrawal of up to $1 trillion from emerging market banks over the next three years. This shift is driven by savers seeking the security and liquidity offered by dollar-pegged digital assets.
- Stablecoins provide an alternative to local banks, especially in countries with weak currencies and high inflation, such as Egypt, Pakistan, Bangladesh, and Sri Lanka.
- Even without offering yields, stablecoins attract users focused on capital preservation.
- The global stablecoin market is projected to reach $2 trillion by 2028, with two-thirds of demand from emerging markets.
- While stablecoins pose a threat to traditional deposits, they offer advantages like cheaper remittances and faster payments.
- Emerging market regulators are conducting digital-currency pilots and upgrading payment systems in response.
Standard Chartered warns that without swift adaptation by local authorities, the increasing use of stablecoins could negatively impact emerging-market banks.