Cryptoization is the growing use of stablecoins and crypto in emerging markets that can weaken central banks’ control over monetary policy and cause deposit erosion, warns Moody’s — posing financial-stability risks when regulation remains fragmented.
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Stablecoins can erode monetary sovereignty and bank deposits
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Moody’s flags rapid adoption in Latin America, Southeast Asia and Africa as highest-risk growth areas
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Global digital-asset ownership rose ~33% to 562 million in 2024, increasing systemic exposure
Cryptoization, stablecoin risks: Emerging markets face monetary and deposit risks from rising stablecoin use—learn mitigation steps and policy actions. Read more.
What is cryptoization and why does Moody’s warn it undermines monetary policy?
Cryptoization is the shift of savings and payments into stablecoins and crypto assets that can reduce central banks’ control over interest rates and exchange rates. Moody’s warns this trend can cause deposit erosion and financial-stability risks in emerging markets when regulation is incomplete.
How are stablecoins driving adoption in emerging markets?
Stablecoins grow fastest where remittances, mobile payments and inflation hedging create demand. Moody’s notes adoption momentum in Latin America, Southeast Asia and Africa stems from real economic needs rather than purely speculative use.
Crypto adoption risks in different markets. Source: Moody’s
Moody’s reports that fewer than one-third of countries have comprehensive digital-asset rules. This fragmented regulatory landscape increases the chance that stablecoin runs or peg failures could produce cross-border contagion.
How could stablecoins cause deposit erosion and financial instability?
Stablecoins that promise fiat-like stability can attract household savings away from domestic banks. If migration is large, banks may see deposit outflows that constrain lending and raise funding costs. In extreme cases, reserve shortfalls at issuers could trigger runs and require costly intervention.
Which jurisdictions are tightening rules and which remain exposed?
Europe implemented MiCA (Markets in Crypto-Assets) provisions in late 2024 to standardize licensing, disclosures and stablecoin reserve rules. The United States adopted the GENIUS Act in July 2025 to set enforceable stablecoin standards. China, after a 2021 trading ban, is advancing a digital yuan and piloting tightly controlled yuan-backed stablecoins, while many emerging-market regulators lag behind.
Moody’s also highlights that advanced-economy regulatory clarity often encourages institutional adoption, whereas in emerging markets the initial drivers are cross-border payments and inflation protection, which magnifies policy trade-offs for central banks.
When did global digital-asset ownership expand most rapidly?
In 2024, global ownership reached an estimated 562 million people, a roughly 33% increase year-over-year, expanding the pool of users whose savings and payment behavior could affect domestic financial systems.
What actions can policymakers take to limit systemic risks?
Policymakers can: 1) adopt clear reserve, transparency and audit rules for stablecoins; 2) strengthen deposit-insurance and liquidity backstops for banks; and 3) coordinate cross-border supervisory frameworks. Rapid implementation of these steps reduces the likelihood of runs and preserves monetary policy effectiveness.
Frequently Asked Questions
Can stablecoins really replace bank deposits in emerging markets?
Stablecoins can draw significant deposits if they offer easier cross-border value transfer, perceived stability, and lower friction than local banks, especially during high inflation or weak banking trust. The scale of replacement depends on regulatory response and issuer reserves.
What are immediate policy priorities to prevent runs on stablecoins?
Priorities include enforcing transparent reserve audits, mandating redemption mechanisms, and ensuring issuers meet liquidity requirements. Central banks should also prepare contingency funding plans to limit spillovers to banks.
Key Takeaways
- Cryptoization is a growing policy challenge: Rising stablecoin use can reduce monetary control and provoke deposit shifts.
- Regulation matters: MiCA, the GENIUS Act and China’s digital-yuan work show different mitigation approaches.
- Policy actions are clear: Reserve rules, bank safeguards and cross-border coordination can limit systemic risks.
Conclusion
Moody’s conclusion underscores a clear trade-off: digital assets can expand financial inclusion but also expose economies to monetary and banking risks if oversight lags. Policymakers should prioritize reserve transparency, liquidity safeguards and international coordination to preserve monetary sovereignty and financial stability.
