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Shadow Dollars: How Stablecoin Cryptoization Is Rewriting Monetary Policy in the Global South

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  • Olaniyi Evans

Abstract

Dollar-pegged stablecoins are substituting for weak domestic currencies across Asia, Latin America, and Africa, a process the International Monetary Fund terms cryptoization. Drawing on IMF, BIS, central bank, and on-chain transaction data through 2025, this article examines how that substitution erodes four pillars of monetary control: money demand, exchange-rate management, interest-rate transmission, and seigniorage. It finds that prohibition fails, that state digital currencies have underdelivered, and that credible macroeconomic stabilization paired with regulated substitution is the only durable response. Implications for central banks and capital allocation are set out.

Suggested Citation

  • Olaniyi Evans, 2026. "Shadow Dollars: How Stablecoin Cryptoization Is Rewriting Monetary Policy in the Global South," Hequation Review, Hequation, vol. 3(2), pages 1-7.
    • Handle: RePEc:heq:heqrev:v3y2026i2a1
    DOI: 10.6084/m9.figshare.32567376
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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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