BIS Paper Warns Stablecoin Dollarisation Evades Capital Controls and Proves Hard to Reverse

A Bank for International Settlements working paper published on 21 July 2026 draws on foreign currency deposit data and stablecoin inflow data across more than 130 economies to compare what the authors call “stablecoin dollarisation” with conventional deposit dollarisation in emerging market and developing economies (EMDEs).

The paper’s central finding is that the two phenomena share the same macro-financial roots: both intensify when exchange rate pass-through is strong and during sovereign or banking crises, and both exhibit significant persistence once established. The authors find little evidence that agents substitute between foreign currency deposits and stablecoins for dollar exposure, meaning the two forms of dollarisation accumulate in parallel rather than crowd each other out.

The more operationally consequential result concerns capital flow restrictions. Deposit dollarisation has historically responded to such controls; stablecoin flows, by contrast, appear largely unaffected. The paper attributes this to stablecoins circulating partly outside the regulatory perimeter. That asymmetry implies that conventional monetary policy tools available to EMDE central banks lose traction precisely when dollar flight into stablecoins accelerates. The historical record on deposit dollarisation also associates even moderate levels with somewhat higher inflation risks, though the authors find little evidence of significant disruption to monetary policy transmission at those levels.

The paper is analytical rather than prescriptive, but its documentation of regulatory perimeter gaps and persistence effects appears aimed at EMDE policymakers and the international standard-setting community, framing stablecoin dollarisation as a structural monetary control challenge rather than a transitional curiosity.