Bank of Korea Study: Dollar Stablecoins Can Pressure Local Currencies Lower

Brazil offered a clear illustration. Because investors can purchase dollar stablecoins directly with Brazilian reais on Binance, rising demand can translate into real dollar purchases. The study found the real depreciated 0.12% as stablecoin demand grew. CoinDesk reported that buying pressure in Binance-paired currencies correlates with local currency depreciation as market makers balance their positions.

The mechanism works differently in South Korea, where investors cannot buy stablecoins directly with won on Binance. There, domestic traders mostly exchange existing stablecoin holdings among themselves, so increased demand shows up in stablecoin prices rather than directly in the foreign exchange market. The study noted this could shift if South Korea permits broader participation by corporations and foreign investors on domestic crypto exchanges.

BitKE also cited Moody's Ratings, which has warned that in emerging markets, high penetration of dollar-linked stablecoins in particular can weaken monetary transmission.

Chainalysis data shows the region as the world's fastest-growing crypto market, with stablecoins driving cheaper cross-border payments across Africa.