Dollar-backed stablecoins can push local currencies lower, Bank of Korea study finds - CoinDesk

**Article Body**

A recent study by the Bank of Korea (BOK) has added a new layer to the global debate on digital assets, concluding that dollar-backed stablecoins can exert downward pressure on local currencies. The central bank’s analysis suggests that when domestic investors accumulate these tokens to park value or access U.S. dollar liquidity, the resulting capital outflow effectively bypasses traditional foreign exchange reserves. In emerging markets, this dynamic can reduce demand for the local fiat currency, leading to depreciation that is not immediately visible in official settlement data.

The BOK’s findings highlight a growing concern for monetary authorities: stablecoins are increasingly functioning as a parallel dollarization channel. Unlike traditional offshore deposits, these tokens settle on public blockchains with near-instant speed, making it harder for central banks to monitor or intervene. For economies with volatile currencies or capital controls, the study implies that unregulated stablecoin usage could complicate exchange rate policy. What investors should watch is whether other central banks begin to mirror the BOK’s stance, potentially accelerating regulatory frameworks that require stablecoin issuers to hold reserves domestically or report cross-border flows. The study does not predict an imminent crisis but underscores a structural shift in how global dollar demand is expressed.