A Washington think tank, the Atlantic Council, suggests that stablecoins might actually help the US dollar maintain its global dominance.
Stablecoins: A Small but Growing Force
While the $227 billion stablecoin market is small compared to the overall US capital markets ($6.22 trillion) and the entire crypto market ($3.39 trillion), it’s growing fast. If this double-digit growth continues, stablecoins could become a significant part of the crypto market, and maybe even the broader financial markets. Importantly, most stablecoins are pegged to the US dollar. Their speed and efficiency could influence how global reserve currencies shift.
The Dollar’s Shrinking Share
The US dollar’s share of global foreign exchange reserves has dropped from 71% in 2001 to 54.8% today. This decline is happening gradually, with various currencies slowly chipping away at the dollar’s dominance.
Stablecoins: A Potential Game Changer?
The Atlantic Council argues that the widespread adoption of US dollar-backed stablecoins could actually reverse this trend. Individual users’ choices about using stablecoins have a real impact on global reserve currency status. Therefore, policy decisions around stablecoins in the coming years will be crucial in shaping the future of both stablecoins and the dollar.
