IMF Flags Stablecoins, Tokenization as Financial Stability Risks: Report

The International Monetary Fund (IMF) has warned that the rapid growth of tokenised finance and stablecoins could increase systemic risk in the global financial system, with crises unfolding faster and leaving policymakers less time to respond, according to a new paper released on April 13.

The report, authored by IMF Monetary and Capital Markets Department Director Tobias Adrian, highlights that tokenisation is fundamentally reshaping financial infrastructure while introducing vulnerabilities related to speed, concentration, and cross-border capital movement.

Faster Crisis Transmission in Tokenized Systems

The IMF noted that tokenised financial systems, which rely on blockchain-based settlement and programmable assets, could accelerate the pace at which financial stress spreads. Unlike traditional systems, where frictions can slow down contagion, tokenised platforms allow near-instantaneous transactions, amplifying volatility during periods of market stress.

According to the report, this increased speed reduces the window for regulatory or central bank intervention, raising the risk of rapid liquidity shocks and systemic disruptions. The IMF emphasised that without appropriate safeguards, these dynamics could intensify financial instability during adverse conditions.

The paper identifies stablecoins as a key area of concern, noting that they function more like money market funds (MMFs) than sovereign-backed currency. Their value depends on the quality and liquidity of underlying reserve assets, making them vulnerable to sudden loss of confidence.

Global stablecoin transaction volumes reached approximately $390 billion annually as of December 2025, reflecting growing adoption driven by features such as programmability, global accessibility, and continuous availability.

However, the IMF cautioned that many private issuers lack sufficient transparency and liquid reserves to guarantee redemption at par value under stress. As a result, stablecoins could face “confidence-driven runs,” similar to those seen in traditional financial products during crises.

The report referenced the collapse of TerraUSD in May 2022, which erased about $45 billion in market capitalisation and triggered broader losses of nearly $300 billion across the digital asset market, as an example of systemic vulnerability.

Policy Debate: Stablecoins vs Synthetic CBDCs

The IMF outlined an emerging policy debate between privately issued stablecoins and synthetic central bank digital currencies (sCBDCs). While stablecoins rely on private sector backing, central banks fully support sCBDCs with their reserves, which regulated intermediaries then distribute.

Under the sCBDC model, central banks do not directly issue digital currency to the public; instead, they provide the underlying settlement asset, which ensures stability and convertibility. Private entities manage customer interfaces, innovation, and compliance functions.

The report noted that while stablecoins may promote efficiency and innovation, sCBDCs offer stronger assurances of monetary stability. However, they also introduce challenges, including potential expansion of central bank balance sheets and blurred boundaries between public and private financial roles.

Ultimately, the IMF stressed that the choice between these models has “systemic implications” and requires clear policy direction regarding settlement assets and financial backstops.

Cross-Border Flows and Monetary Sovereignty Risks

Tokenised finance also raises concerns about cross-border capital flows and monetary sovereignty. The IMF warned that digital assets can move seamlessly across jurisdictions, increasing the risk of sudden capital flight, currency substitution, and reduced effectiveness of domestic monetary policy.

These risks are particularly pronounced in emerging markets with weaker currencies, where users may shift to foreign-denominated stablecoins. The report cited examples of increased stablecoin usage in economies facing inflation and currency instability.

Such developments complicate regulatory oversight and crisis management, as national authorities may struggle to monitor and control decentralised financial activities that operate beyond traditional frameworks.

The IMF emphasised the necessity of comprehensive policy frameworks to address the risks associated with tokenisation. Key recommendations include strengthening governance standards, ensuring legal clarity, and enhancing international coordination among regulators.

It also called for robust infrastructure safeguards, including higher liquidity buffers and conservative risk management practices, particularly for stablecoin issuers without access to central bank reserves.

The report highlighted the importance of anchoring digital finance in public trust by maintaining reliable settlement mechanisms and clearly defined institutional responsibilities.

While acknowledging the potential benefits of tokenisation in improving efficiency and financial inclusion, the IMF stressed that failure to address structural risks could undermine global financial stability.

"Tokenisation represents a profound transformation of financial systems, but its long-term impact will depend on how effectively policymakers shape its development,” the report concluded.