Moody's: The wave of cryptocurrencies driven by stablecoins poses severe challenges to monetary sovereignty and financial stability in emerging markets

According to a report from Mars Finance and Grong Weide, international credit ratings agency Moody's recently warned that the crypto-wave driven by stablecoins is posing an increasingly severe challenge to the monetary sovereignty and financial stability of emerging markets. The report states that with the accelerating global adoption of stablecoins and other cryptocurrencies, emerging markets face the risk of eroding their monetary sovereignty. The widespread penetration of stablecoins anchored to fiat currencies such as the US dollar could erode central banks' traditional ability to regulate interest rates and exchange rates. Moody's specifically emphasizes that if individuals shift their bank deposits to stablecoins or crypto wallets, the banking system could face a loss of deposits, impacting not only liquidity but also overall financial stability. Data shows that by 2024, the number of digital asset holders worldwide will reach approximately 562 million, a year-on-year increase of 33%. Emerging markets such as Latin America, Southeast Asia, and Africa saw the fastest growth. This growth is primarily driven by cross-border remittance convenience, mobile payment needs, and the need to hedge against local currency inflation. This stands in stark contrast to the demand in developed economies driven by clear regulations and investment channels. Moody's warns that if regulatory gaps are not addressed promptly, the crypto-wave could further amplify monetary and financial security risks in emerging markets.