IMF Insights: How Stablecoins Can Improve Payments and Global Finance

By: Peter Ort, The Quinnipiac University Global Economics Research Team

Photo by: CoinWire Japan on Unsplash

On December 4, 2025, the IMF released a new blog titled How Stablecoins Can Improve Payments and Global Finance, highlighting the potential for near seamless international payments and reliability.

            The main reason why stablecoins have been rising in popularity over the recent years is due to their strong backing by the US Treasury, which separates them from traditional crypto assets. While assets like Bitcoin constantly swing in price from market volatility, stablecoins are centralized and backed mostly by US Treasury bonds, cash, and other liquid assets. Due to their cheapness and consistency in pricing, stablecoins are beginning to be used for international payments. The alternative, correspondent banking (where international payments travel through networks of commercial banks), is often too slow and expensive, where it can cost up to 20% of the amount being sent for remittances.

            However, no alternative ever comes without risks or setbacks, which stablecoins certainly share. The most evident risk of using stablecoins for international transactions is if the underlying asset that backs it is devalued, potentially leading to runs. Although stablecoins are mostly backed by bonds, this risk is still worth taking into consideration. Another risk is countries replacing their native currency (whether it is due to inflation or instability) with stablecoins or assets that back it, such as the USD or Euro. This can lead to the inability for a central bank in a foreign country to control monetary policy and become the lender of last resort.

            Since stablecoins are very new to the market, the lack of regulation may still result in money laundering and potential funding for terrorist organizations due to the location of the transaction often being invisible. Although many central banks are working together with policy makers, the IMF, and FSB, stablecoins have a long way to go before being integrated fully into society, for better or for worse.

For more information, you can read “How Stablecoins Can Improve Payments and Global Finance”