Former IMF official: Stablecoins may strengthen the concentration of financial power, exacerbating the risks of dollar dominance and small country currency imbalances.

In his latest article, "The Stablecoin Paradox," Eswar S. Prasad, a former official at the International Monetary Fund and a professor at Cornell University, argues that while stablecoins reduce payment costs, improve the efficiency of cross-border transfers, and promote financial inclusion to some extent, their essence may reinforce the concentration of financial power, exacerbate the dominance of the US dollar, and reshape the international monetary system. He believes that stablecoins are not truly decentralized; users rely on the issuing institution rather than the code itself for trust. With the relaxation of US legislation, the potential entry of giants like Amazon and Meta, and large banks exploring the issuance of stablecoins, a future landscape of "dominant institutions monopolizing stablecoins" may emerge. Simultaneously, the global expansion of dollar-denominated stablecoins may further erode the monetary sovereignty of smaller nations.