Dollar stablecoins can weaken local currencies, BOK finds

Demand for dollar-backed stablecoins can place downward pressure on national currencies when investors receive direct access through fiat trading pairs, according to research published by the Bank of Korea on Sept. 3. The effect appeared after Binance introduced trading between selected local currencies and stablecoins such as USDT and USDC. Summary Dollar-backed stablecoins transmitted buying pressure into exchange rates after Binance introduced direct fiat pairs globally. Local stablecoin premiums declined between 0.33 and 0.38 percentage points following Binance pair introductions overall. Korea showed higher stablecoin premiums but no measurable exchange-rate response without direct Binance pairing access. Market makers can sell received local currencies for dollars while balancing stablecoin trading positions afterward. Researchers examined 12 currencies using pairing events between 2019 and 2025 to identify transmission effects. The Bank of Korea study, written by Jihyun Kim and Sangheum Cho, examined 12 currencies with enough local and global exchange data. Pair introductions covered the period from 2019 through 2025. The researchers found that direct fiat-stablecoin markets...