A paper published by the Kansas City Federal Reserve argues that dollar-backed stablecoins reinforce the dollar’s global role rather than erode it. Over 98% of stablecoins by value are dollar-denominated, led by USDC and USDT, with USDC having processed over $10 trillion in lifetime transactions. The dollar still accounts for approximately 59% of cross-border payments outside the euro area, a figure that has remained remarkably stable despite the decline in its share of global FX reserves from 72% in 2000 to 57% in Q1 2026. Stablecoin issuances generate growing demand for short-term US Treasuries, with authors projecting stablecoin reserves could eventually reach trillions of dollars. No credible dollar competitor has emerged in the stablecoin market, as central bank digital currencies from other jurisdictions have not achieved the cross-border usage needed to challenge the dollar’s network position in digital payments.
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