The digital dollarization dilemma: Stablecoins and monetary subordination

Carla Coburger

Japanese Economy, 2025, vol. 51, issue 1-2, 133-158

Abstract: This paper introduces the concept of digital dollarization to describe the reproduction of existing power structures within the international monetary system through the usage of stablecoins. It contributes to the political economy of money by demonstrating that new forms of digital currency can reproduce entrenched power asymmetries between core and peripheral economies, offering fresh insights into financial subordination and policy responses in the digital age. The paper focuses on Nigeria as a paradigmatic case and deploys a mixed-method approach based on qualitative interviews in Lagos and Abuja between 2022 and 2025 and descriptive analysis of crypto transaction volumes. By drawing on Marxist theories of money and the concept of financial subordination, it demonstrates how household strategies for monetary empowerment undermine national monetary sovereignty within the hierarchically ordered international monetary system and reinforce external dependency on the US dollar. The paper further analyses the Nigerian state’s spatially selective liberalisation via proposed cryptocurrency special economic zones. The findings highlight a monetary dilemma: optimal household behavior precipitates systemic instability, while state-led digital monetary innovations fail to reverse currency subordination.

Date: 2025
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DOI: 10.1080/2329194X.2025.2552378

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