Bank of Korea Study Finds Stablecoin Demand Can Weaken Local Currencies - CryptoDaily

The Bank of Korea’s latest research adds a formal, central-bank voice to a growing global debate: the quiet gravitational pull of dollar-pegged stablecoins. According to the study, sustained demand for these digital assets can erode the influence of local fiat currencies. The mechanism is straightforward—when residents and businesses prefer transacting or saving in a stable, dollar-linked token, they reduce their reliance on the domestic currency for everyday pricing and wealth storage.

For emerging markets, this dynamic presents a structural challenge. The study suggests that large-scale stablecoin adoption could weaken the transmission of monetary policy. If a significant portion of economic activity shifts to a foreign-anchored asset, the central bank’s interest rate decisions may have a diminished effect on domestic credit and spending. In extreme scenarios, this could accelerate currency substitution, where the local unit is used less and less.

What to watch now is regulatory response. The Bank of Korea’s research is not a policy proposal, but it signals that authorities are studying the risks seriously. Global investors should monitor how other central banks react—whether they impose stricter capital controls, develop their own digital currencies, or create rules for stablecoin issuers. The outcome will likely shape the pace of digital asset adoption in Asia and beyond.