Bank of Korea Study: Demand for USD Stablecoins May Depress Local Currency Exchange Rates

PANews, September 6 - According to Coindesk, a study by the Bank of Korea found that once global exchanges allow investors to directly use fiat currency to purchase dollar-pegged stablecoins, demand for dollar-pegged stablecoins could depress national currency exchange rates. The research report pointed out that after Binance launched fiat-stablecoin trading pairs, the local stablecoin premium fell by approximately 0.33 to 0.38 percentage points. The study found that this effect is not limited to the cryptocurrency market. For currencies in Binance trading pairs, increased stablecoin buying pressure was associated with the depreciation of the local currency. South Korea does not have a direct Binance Korean won-stablecoin trading pair, so the exchange rate showed no significant reaction. Instead, buying pressure mainly pushed up the premium of local stablecoins in South Korea. In another test using weekly data, a one-standard-deviation increase in Bitcoin search volume on Google was associated with a 0.118% depreciation of the Brazilian real. At the same time, the premium of Brazilian stablecoins also rose by 0.109 percentage points.