Analysts Geoffrey Kendrick and Madhur Jha project that up to $1 trillion could shift from emerging market (EM) bank deposits into US dollar-pegged stablecoins by the end of 2028.
This reflects growing demand for stablecoins as a hedge against local currency volatility, inflation, and limited access to traditional USD accounts. Approximately $173 billion two-thirds of the global stablecoin supply is already held in EM savings wallets.
Forecast by 2028: EM stablecoin savings could reach $1.22 trillion, driving over $1 trillion in outflows from EM banks. Global Stablecoin market is expected to hit $2 trillion by end-2028, with EMs accounting for the majority of growth.
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Stablecoins like USDT and USDC offer: Low-friction USD exposure: Users can hold digital dollars via mobile wallets, bypassing local banks’ credit risks and restrictions.
24/7 accessibility: Ideal for remittances, payments, and savings in high-inflation environments. Even without yields prohibited for US-compliant issuers under the recently passed GENIUS Act, stability trumps returns for many users.
The report anticipates broader retail adoption, evolving from large institutional wallets to millions of small household holdings.Most Vulnerable EM CountriesStandard Chartered highlights nations with high inflation, weak reserves, and large remittance inflows as prime candidates for deposit flight.
Larger EMs like India, China, Brazil, and South Africa are also flagged for accelerating adoption, potentially disrupting traditional banking. Shrinking deposits could erode fee income from FX and payments, but opportunities exist in stablecoin custody and treasury services.
EM authorities may accelerate digital currency pilots to compete, as stablecoins enable cheaper cross-border transfers. This “trillion-dollar migration” could mark one of the decade’s largest shifts in global savings, from fiat banks to blockchain-based systems.
Banks may lose fee income from foreign exchange (FX) transactions, cross-border payments, and remittance services as stablecoins offer cheaper alternatives. Banks could pivot to offering stablecoin custody, wallet integration, or treasury services to remain competitive.
Reduced deposits may weaken bank balance sheets, especially in vulnerable EMs like Egypt, Pakistan, or Sri Lanka, potentially triggering financial instability. Increased demand for USD-pegged stablecoins could exacerbate pressure on local currencies, worsening inflation or devaluation in countries with weak reserves.
As savings shift to stablecoins, central banks may struggle to manage money supply and interest rates, complicating monetary policy. Stablecoins’ ease of transfer could accelerate capital outflows, especially in crisis-prone economies like Sri Lanka or Colombia.
EM regulators may fast-track central bank digital currencies (CBDCs) to compete with private stablecoins, offering state-backed digital alternatives. Countries may impose restrictions on stablecoin use to protect banking systems, though enforcement could be challenging due to decentralized platforms.
Governments may introduce taxes or KYC/AML requirements for stablecoin transactions to retain some control over capital flows. Stablecoins provide low-cost, 24/7 access to USD exposure, benefiting unbanked populations and those in high-inflation environments.
Stablecoins could dominate remittance markets in Bangladesh, Pakistan cutting costs compared to traditional services like Western Union. Retail adoption could grow from institutional wallets to millions of household users, fundamentally altering how savings are stored and transferred.
Widespread stablecoin adoption would further entrench the US dollar’s role in global finance, as most stablecoins are USD-pegged. A $2 trillion global stablecoin market with $1.22 trillion from EMs would accelerate blockchain infrastructure adoption, from wallets to DeFi platforms.
Countries reliant on USD stablecoins may face reduced financial sovereignty, while the US could gain indirect influence over EM economies. Stablecoin issuers like Tether, Circle face scrutiny over reserve backing and stability, with potential for runs if trust erodes.
The US GENIUS Act passed recently prohibits yield-bearing stablecoins, which could limit their appeal compared to interest-bearing bank deposits. Increased retail adoption raises risks of hacks, scams, or wallet vulnerabilities, particularly in less tech-savvy EM populations.
Stablecoins could streamline trade in EMs, reducing reliance on costly SWIFT-based systems. EM banks could partner with stablecoin providers to offer hybrid services, blending fiat and crypto ecosystems.
This shift could redefine global savings, with EMs leading a transition to blockchain-based systems. However, it also poses risks of financial disruption if not managed carefully.