Stablecoin demand in countries like Argentina and Turkey is climbing amid economic instability. That's just one of the ways permissionless access to dollar-denominated tokens is good for the greenback, Moody's Yiannis Giokas writes. Opinion.
As the global economy continues to absorb geopolitical tensions, we see increasing speculation that the U.S. dollar’s global dominance could wane, with a steady decline in the dollar’s share of central bank reserves and increasing de-dollarization efforts among BRICS nations and other emerging markets.While the dollar is likely to remain the dominant reserve currency globally in the near future, domestic and foreign policies could erode its overall dominance. Amid these shifts, U.S.
For example, in countries with high inflation like Turkey and Argentina, with rates of 38.2% and 115.6% , respectively, residents scramble to convert their income and savings into U.S. dollars for protection. Meanwhile, they face capital controls limiting foreign currency holdings and a central bank-set currency exchange rate that may undervalue their currency by up to 50%, as witnessed with Argentina's peso.
Amid this complexity, U.S. regulated fiat-backed stablecoins present a potential solution. These digital tokens are pegged to the value of a fiat currency, typically the U.S. dollar, and are designed to maintain a stable value relative to the underlying asset. They can offer the stability of the U.S. dollar combined with the flexibility and technological advantages of cryptocurrency, providing a novel financial tool that can help solidify the dollar's position in the global economy.
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