05.12.202514:06 Forex Analysis & Reviews: IMF raises concerns over future of central banks

As Bitcoin exhibits relative stability, trading above $90,000, the International Monetary Fund (IMF) warned on Thursday that the rise of stablecoins could accelerate the substitution of local currencies in countries with weak monetary systems, potentially undermining central banks' control over capital flows.

In a report titled "Understanding Stablecoins," published on Thursday, the IMF cautioned that the rapid growth in the popularity of dollar-denominated stablecoins, coupled with their ease of cross-border use, might encourage households and businesses to abandon local currencies in favor of dollar-based stablecoins, particularly in environments marked by high inflation or low trust in national currencies.

According to the IMF, such developments could pose significant risks to macroeconomic stability and financial integrity. Stablecoins pegged to stable assets like the US dollar may become increasingly appealing to individuals in countries where national currencies are subject to high inflation or devaluation. As a consequence, demand for local currencies could sharply decline, leading to further weakening of monetary policy and increased reliance on foreign currencies. Similar trends are already observable in several countries experiencing hyperinflation. Currently, Asia leads all regions in overall stablecoin activity, although its usage relative to GDP is most pronounced in Africa, the Middle East, and Latin America—areas historically characterized by high currency substitution risks.

The report also emphasized the necessity for effective regulatory frameworks for stablecoins to prevent such scenarios. These frameworks must address risks associated with money laundering, terrorism financing, and consumer protection. Additionally, regulators should have the authority to oversee stablecoin issuers and impose stringent standards for transparency and risk management.

The IMF noted that stablecoins could potentially facilitate currency substitution, exacerbate the volatility of capital flows by circumventing capital controls, and fragment payment systems if operational compatibility is not ensured. The organization added that these risks might be particularly pronounced in countries characterized by high inflation, weak institutions, or diminished trust in their domestic monetary systems.

It is important to note that the total volume of the two largest stablecoins, USDT and USDC, has surged since 2023, reaching a combined total of $260 billion, while trading volumes skyrocketed to $23 trillion in 2024.

Despite the IMF's warnings, crypto enthusiasts argue that stablecoins can play a positive role in developing the financial system, particularly in regions where access to traditional banking services is limited. They contend that stablecoins can offer cheaper and faster cross-border payments and promote financial inclusivity.

Trading recommendations:

In terms of the technical outlook for Bitcoin, buyers are currently targeting a return to the $92,800 level, which would pave the way toward $95,000; beyond that, the next target would be approximately $97,300. The ultimate goal will be the peak around $100,300, and overcoming this level would signify attempts to re-enter a bullish market. Should Bitcoin decline, buyers are expected at the $90,300 level. Should trading return below this area, BTC could quickly drop towards $88,200, with the further target being the $85,800 region.

Regarding Ethereum, a clear consolidation above the $3,283 level opens a direct path to $3,474. The next major target will be the peak around $3,664, and surpassing this could strengthen bullish market sentiments and renew buyer interest. If Ethereum declines, buyers are anticipated at the $3,126 level. A revisit below this zone could rapidly push ETH down to approximately $2,994, with the ultimate target being around $2,924.

What we see on the chart:

- Red lines indicate support and resistance levels where either a price slowdown or active growth is expected;

- Green lines indicate the 50-day moving average;

- Blue lines indicate the 100-day moving average;

- Light green lines indicate the 200-day moving average.

Typically, a crossover or price test of these moving averages either halts market momentum or sets a new directional impulse.