The International Monetary Fund, through its First Deputy Managing Director Dan Katz, warned on August 7 at the University of Cape Town of a paradox: emerging countries that issue their own domestic stablecoins risk unintentionally fueling demand for dollar-backed tokens. According to Katz, dollar-pegged stablecoins attract users due to superior liquidity, network effects, and cross-border acceptance. Even a well-designed domestic stablecoin ends up becoming an entry point to dollar-denominated assets rather than an alternative. Katz acknowledged the concrete benefits of these tokens for remittances, trade settlement, and financial inclusion.
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