FSB says dollar stablecoins strain emerging economies

The Financial Stability Board has raised fresh concerns about the spread of foreign currency stablecoins in emerging markets. 

In its 2025 annual report, the global watchdog said US dollar stablecoins used across borders can create financial and policy risks for developing economies.

Meanwhile, the FSB said foreign currency-denominated stablecoins can create pressure for emerging market and developing economies. It stated that US dollar stablecoins moving across several jurisdictions may carry “potentially more acute” risks for those markets.

According to the report, these risks include currency substitution and weaker use of local payment systems. The board also said they can reduce the effectiveness of domestic monetary policy and create pressure on fiscal resources.

The FSB said regulators still need to track how the stablecoin sector develops. It noted that authorities must understand risks tied to liquidity, operational issues, and links with the wider financial system.

The report also referred to the FSB’s 2023 global framework for crypto asset activity and stablecoin arrangements. After reviewing that framework in 2025, the board said there are still clear gaps and inconsistencies in how it is being applied across jurisdictions.

Moreover, the board said crypto assets and stablecoins still have limited use in real economic activity, including payments. It stated,

“Despite growth in these markets in recent years, crypto-assets and stablecoins are not widely used in financial services supporting the real economy.”

At the same time, the FSB said stablecoins may offer some benefits. Still, it added that regulators should keep watching vulnerabilities as connections with core financial markets and institutions continue to grow.

FSB sets focus areas for 2026

The report said the board will continue to monitor digital innovation linked to crypto assets in 2026. Stablecoin-related risks remain part of that work, especially in areas tied to market structure and financial resilience.

The FSB also listed other priorities for the coming year. These include private credit, nonbank financial intermediation, cross-border payments, crisis preparedness, and further work on regulatory modernization.