International Stablecoin Flows, Capital Controls and Currency Crises

This paper constructs a country-level panel of estimated international stablecoin flows, covering 188 countries, totaling $21.4 trillion in gross flows between 2018 and 2025. Activity is disproportionately concentrated in emerging markets and developing economies, which hold three quarters of stablecoins. When countries restrict capital outflows, stablecoin activity rises by roughly 30 percent over the following six months, then plateaus, and does not fall back when restrictions are removed. When currency crises hit, stablecoin holdings increase by roughly 75 percent within a year, and the new holdings persist. Both findings suggest that dollarization may now also operate through stablecoins.