Amidst the growing international focus on stablecoins, the International Monetary Fund (IMF) has released a 56-page report outlining what the key risks associated with its adoption are.
The report draws parallels to claims made by several other central banks and international financial organizations regarding the threat stable coins pose to government monetary control, ultimately arguing in favor of central bank digital currencies (CBDCs).
“Facilitating currency substitution by adopting a stablecoin would impact monetary sovereignty, the ability of a country to exercise full control over its currency and monetary policy,” the report, released on December 5, said. “Central bank money is the most basic, liquid and flexible form of money, and it should continue to play its role.”
Gate CBO Kevin Lee shared a more benign view with CoinDesk: “While central banks rightly focus on sustainability, we believe the narrative of ‘substitution risk’ misses the bigger picture. Private stablecoins and future CBDCs can co-exist.”
In line with recent European Central Bank (ECB) and Bank for International Settlements (BIS) reports, the IMF said that “in some circumstances, such as a fire sale”, “central banks may be forced to intervene”, which would threaten financial stability.
In this regard, Erbil Karaman, co-founder of Huma.Finance, whose payments network has processed more than $8 billion in stablecoin transactions, told CoinDesk: “The benefits of stablecoins far outweigh the concerns. The report fails to acknowledge that the majority of people live in highly volatile fiat economies.”
“Centralized policymaking and centralized financial systems have failed these people for decades, which is why they are adopting stablecoins at scale and freeing themselves,” he said.
The IMF says the crypto industry lacks controls and regulatory compliance, making it vulnerable to illicit transactions.
“Due to pseudonymity, low transaction costs and ease of cross-border transit, stable coins can also be used for illicit purposes such as money laundering and terrorist financing,” the IMF said.
The same case can be made for the US dollar. The Treasury released a report in 2024 stating, “The US dollar remains a popular method of transporting and laundering illicit proceeds in and out of the United States.”
Ricardo Salinas Pliego, the influential billionaire founder of Mexican Grupo Salinas, said he sees all official anti-crypto campaigns as a clear sign of fear.
“The banks, the establishments, they’re scared, because they’re going to lose the power and wealth that they’ve had for centuries. And that’s what this whole campaign against crypto and Bitcoin is about,” he said in a recent interview with Kitco News.
The IMF report acknowledged that stablecoins pose a challenge to government and institutional control over money, which they are all worried about. “In this sense, the presence of stable coins can also be seen as a competitive element encouraging governments in pursuing policies to avoid the loss of monetary authority.”
Kraken co-CEO Arjun Sethi declared his view in October, “This is the real story… the power to issue and control money is spreading away from institutions and into open systems that anyone can build on.”