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

Olaniyi Evans

Hequation Review, 2026, vol. 3, issue 2, 1-7

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.

Keywords: cryptoization; stablecoins; monetary sovereignty; central bank digital currency; capital flow management (search for similar items in EconPapers)
JEL-codes: E42 E52 F31 G28 O33 (search for similar items in EconPapers)
Date: 2026
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