Capital Controls

A July 2026 IMF Working Paper by Brandon Joel Tan models stablecoins in fixed exchange-rate regimes as both an access technology and an information technology: they cut the cost of dollar hedging and turn many fragmented parallel prices into one public signal. In calm conditions that improves welfare; once a peg is badly misaligned, the same signal can help households coordinate an exit. Drawing on the paper, BIS spillover evidence and Bolivia's experience, the article argues stablecoins can intensify a currency crisis but rarely originate one, and that suppressing the price does not restore lost credibility. The better response is proportionate regulation of issuers, lawful low-value access, narrow and time-limited emergency tools, privacy-conscious data, and macroeconomic repair.