THE USE OF STABLECOINS IN DEVELOPING COUNTRIES, INCLUDING CENTRAL ASIA: REMITTANCES, INFLATION PROTECTION AND FOREIGN-EXCHANGE RISKS

Abstract

Stablecoins have emerged as one of the most discussed forms of digital assets because they attempt to combine some advantages of blockchain-based transactions with the relative price stability of traditional currencies or other reference assets. Their growing importance is particularly visible in developing countries, where people may face expensive international transfers, limited access to foreign currency, weak payment infrastructure, inflation, or rapid depreciation of the national currency. In such circumstances, a dollar-denominated stablecoin can appear attractive because it allows a person to hold and transfer a digital asset whose value is intended to remain close to that of the US dollar. However, describing stablecoins simply as a “digital dollar” would be legally and economically misleading. A stablecoin is not automatically the same thing as a bank deposit, foreign currency, electronic money, or legal tender. Its practical value depends on the reliability of its issuer, the quality of its reserves, the possibility of redemption, the availability of lawful exchange services, and the regulatory framework of the country in which it is used.