A recent IMF report states that stablecoins can quickly penetrate economic systems, potentially leading to “currency substitution” and weakening central banks’ control over liquidity and interest rates, with higher risks especially in scenarios involving non-custodial wallets and cross-border use. Currently, 97% of stablecoins are pegged to the US dollar. The IMF recommends that countries establish frameworks to prohibit digital assets from becoming legal tender. The report highlights that stablecoins are growing rapidly relative to FX (foreign exchange) deposits in regions such as Africa, the Middle East, and Latin America. US Treasury Secretary Scott Bessent believes that rising demand for stablecoins helps with government debt financing. (Decrypt)