FSB Warns Dollar Stablecoins Pose Risks to Emerging Markets

• Financial Stability Board (FSB) warns that US dollar-denominated stablecoins pose severe risks to emerging market and developing economies.
• The 2025 annual report highlights potential issues such as currency substitution and the undermining of domestic monetary policy.
• Global regulators have identified significant gaps in the implementation of the 2023 regulatory framework for crypto assets.

Vulnerabilities in Emerging Markets

In its latest annual assessment, the FSB has pointed out that stablecoins pegged to the US dollar could introduce significant macroeconomic instability to developing nations. Because these assets often circulate across multiple international jurisdictions, the watchdog believes the risks they pose are "potentially more acute" for economies with less resilient financial infrastructures.

Specific threats identified by the FSB include:

• Currency substitution, where foreign stablecoins replace local tender.
• Decreased effectiveness of domestic monetary policy tools.
• Circumvention of capital flow measures and strain on fiscal resources.
• Reduced reliance on domestic payment systems.

Regulatory Gaps and Implementation Challenges

The report notes that while the FSB established a global regulatory framework for crypto assets and stablecoin arrangements in 2023, a review conducted in 2025 shows that adoption of these rules is inconsistent. There are still major discrepancies in how different jurisdictions oversee the sector, leaving the global financial system vulnerable to liquidity and operational risks.

Despite the growth of the sector, the FSB maintains that crypto assets and stablecoins have yet to achieve significant adoption in real-world economic use cases, particularly in the realm of everyday payments. However, the increasing links between these digital assets and core financial institutions necessitate rigorous monitoring to prevent systemic contagion.

Future Oversight Priorities

Looking ahead to 2026, the FSB—which was founded in April 2009 by G20 nations—plans to intensify its focus on digital innovation and the monitoring of stablecoin vulnerabilities. The organization will also broaden its scope to address other emerging financial risks.

Key areas of future focus include nonbank financial intermediation, the growth of private credit, and the improvement of cross-border payment systems. The board also intends to modernize regulatory standards and enhance global crisis preparedness to ensure the stability of the international financial system.