A newly published IMF working paper models how dollar stablecoins affect countries that fix or heavily manage their exchange rates. It’s well known that residents of countries with weak currencies are keen to hold dollars rather than a devaluing local currency, and this is one of the biggest non-crypto drivers of stablecoin adoption. Stripe started offering stablecoin accounts to small businesses in more than 100 countries last year, including jurisdictions where it doesn’t usually operate.
Countries that control their exchange rates usually ration access to foreign currency, so a parallel market emerges. Historically that market was fragmented. The paper uses Bolivia as its motivating case. During the dollar shortage, the parallel dollar in La Paz was quoted at anywhere between Bs 12 and Bs 15 depending on the dealer, some dealers had no dollars at all, and banks charged opaque commissions for offshore transfers. There were many parallel prices but no single visible one.
Stablecoins changed that. After Bolivia lifted its virtual asset restrictions in June 2024, activity multiplied twelvefold within a year and the USDT price in bolivianos became the country’s reference exchange rate, appearing on shop price tags. The central bank now publishes USDT prices on its website.
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