FSB flags dollar stablecoins as bigger risk for emerging markets in annual report

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The Financial Stability Board (FSB), a global financial watchdog hosted by the Bank for International Settlements, warned on Tuesday that foreign currency-denominated stablecoins can pose financial stability and macroeconomic risks for emerging market and developing economies.

In its annual report for 2025, the FSB said that US dollar-denominated stablecoins circulating across multiple jurisdictions pose “potentially more acute” risks to the financial stability of emerging economies.

The report said those risks can include currency substitution, reduced use of domestic payment systems, lower effectiveness of domestic monetary policy, strains on fiscal resources and the circumvention of capital flow measures.

The FSB said it remains necessary for lawmakers to assess how the stablecoin sector develops in order to understand and respond to vulnerabilities related to liquidity, operational risk and interlinkages with the broader financial system.

The report builds on the FSB’s 2023 global regulatory framework for crypto asset activities and global stablecoin arrangements, which the board reviewed in 2025 and said still shows significant gaps and inconsistencies in implementation.

The FSB was established in April 2009 as a successor to the Financial Stability Forum. It was created by G20 economies after the 2008 financial crisis to strengthen global financial systems.

Stablecoins still have limited real use

Crypto assets and stablecoins still lack adoption in real economic use cases such as payments, the FSB said in the report.

“Despite growth in these markets in recent years, crypto-assets and stablecoins are not widely used in financial services supporting the real economy.”

The report said stablecoins can provide benefits, but added that authorities should continue monitoring vulnerabilities tied to interlinkages, liquidity and operational risks as linkages with core financial markets and institutions increase.

The FSB also outlined other key areas of focus in 2026, including digital innovation related to crypto assets and monitoring stablecoin vulnerabilities.

Other focal points included monitoring vulnerabilities tied to private credit, nonbank financial intermediation, cross-border payments, and the implementation of additional measures tied to crisis preparedness and regulatory modernization.

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