Stablecoin Demand Can Weaken Local Currencies, Bank of Korea Study Finds

A Bank of Korea study finds fiat-stablecoin pair listings on global exchanges can weaken local currencies, with Brazil's real falling 0.118% per BTC demand spike.

Stablecoin & Crypto Regulation News

Demand for dollar-backed stablecoins can put downward pressure on local currencies once a global exchange introduces direct trading pairs between those stablecoins and local fiat currencies, according to a study published Sept. 3 by the Bank of Korea. The paper was authored by Jihyun Kim and Sangheum Cho, economists in the bank's International Department.

The researchers

what happened to exchange rates after a major global exchange introduced fiat-stablecoin trading pairs for specific currencies. The stablecoins at the center of the study were

Tether (

) and

USD Coin (

), both pegged to the US dollar. The analysis covered 12 currencies with sufficient cross-exchange trading history, with pairing dates ranging from 2019 to 2025.

The mechanism runs through professional market makers. When a fiat-stablecoin pair goes live on a global exchange, market makers step in as counterparties to investors buying stablecoins with their local currency. After supplying the stablecoins, those market makers hold the local currency and then sell it in the FX market to restore their dollar positions. That sequence connects stablecoin demand directly to currency depreciation.