An analysis suggests that as global intermediaries' participation in the dollar stablecoin market expands, the likelihood of a stablecoin demand shock leading to actual foreign exchange transactions and exchange rate fluctuations increases. According to SBS Biz, the Bank of Korea (BOK) presented this analysis today (3rd) in its BOK Issue Note titled 'Linkage between Dollar Stablecoins and the Foreign Exchange Market: Focusing on the Role of Global Exchanges.' The BOK explained that as the issuance and use of dollar stablecoins expand, stablecoin transactions using a specific currency can have a similar effect to buying and selling dollar-denominated assets in that currency, potentially leading to actual foreign exchange transactions and exchange rate fluctuations.
