New research from two major central banks has intensified debate over stablecoin regulation, revealing how dollar-backed tokens create measurement challenges domestically while simultaneously pressuring local currencies in foreign markets.
A Federal Reserve staff note published September 5 exposes fundamental classification problems that complicate how economists track the money supply. The research demonstrates that the same underlying dollars can potentially be counted twice across traditional monetary aggregates—appearing simultaneously in bank deposits that form part of M1 or M2 measures while also backing circulating stablecoins. This double-counting risk emerges because current monetary frameworks were designed before tokenized dollar instruments became widely used payment and settlement tools.
The Fed economists' analysis makes classification theoretically possible, according to the research summary, but practical implementation faces significant obstacles. Reserve overlap between traditional banking and stablecoin issuers creates accounting ambiguities that prevent clean liquidity measurement. Offshore circulation of stablecoins further complicates domestic monetary tracking, as tokens move across borders without corresponding entries in national payment systems. These measurement gaps could distort policymakers' understanding of actual dollar liquidity conditions during periods of financial stress.
The Reserve's findings arrive alongside complementary research from the Bank of Korea demonstrating how dollar-backed stablecoins transmit exchange rate pressure into local economies. The Korean central bank's study identifies a specific mechanism: buying pressure in Binance-paired currencies correlates with local currency depreciation as market makers balance their positions. When traders demand stablecoins on offshore exchanges, market makers must acquire dollars to maintain hedged books, generating flows that can overwhelm smaller foreign exchange markets.
This empirical finding from South Korea—where stablecoin trading volumes rank among the highest globally—provides concrete evidence for theoretical concerns raised by international financial institutions. The Bank of Korea's analysis suggests that stablecoin demand functions as a dollarization pressure valve, allowing domestic economic actors to effectively exit local currency positions without requiring direct access to traditional foreign exchange markets. For emerging market central banks with limited intervention capacity, such dynamics complicate independent monetary policy implementation.
Together, the Fed and Bank of Korea studies illustrate stablecoins' bifurcated regulatory challenge. In the United States, policymakers confront measurement frameworks ill-suited to distinguish between bank deposits and tokenized liabilities. Abroad, officials face capital-account pressures transmitted through novel channels that evade traditional macroprudential tools. Neither analysis prescribes specific policy remedies, but both imply that existing regulatory architectures—designed for siloed national financial systems—require substantial adaptation.
The simultaneous publication of these studies suggests growing institutional attention to stablecoin macroeconomic implications beyond consumer protection or financial stability concerns that have dominated previous regulatory discussions. For international coordination efforts already underway through bodies like the Financial Stability Board and International Organization of Securities Commissions, the research provides empirical grounding for concerns about cross-border spillovers that unilateral national frameworks may inadequately address.