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The IMF Counted Where On-Chain Dollars Actually Go. Most of the Flows Touch an Emerging Economy, and the Cost to Beat Is Not the Chain.

For years the stablecoin debate has been argued from the rich-country side. Will dollar tokens replace card networks, will they compete with bank deposits, will Treasury markets notice. This month the International Monetary Fund looked at the question from the other end, from the countries that receive these dollars rather than issue them, and the picture it draws is very different from the one the debate usually assumes.

The paper is titled Foreign Currency Stablecoins

: 
Initial Considerations on Policies to Manage and Enhance Macrofinancial Stability. It is careful, it is two-sided, and it contains the most useful cost measurement published about stablecoin payments this year.



Almost every stablecoin is somebody else's currency.

The Fund starts with a framing that sounds obvious once stated and changes how everything else reads. Market capitalisation went from roughly six billion dollars at the start of 2020 to three hundred and seventeen billion in June 2026, close to fifty-fold. USDT, issued by Tether and domiciled in El Salvador, and USDC, issued by

in the United States, account for roughly ninety percent of it.

From the point of view of nearly every country in the world, that means the stablecoins in circulation are issued abroad and denominated in a foreign currency. The Fund puts the share of such foreign-currency stablecoins at ninety-nine percent of everything outstanding. The euro stablecoin market, for comparison, was about six hundred and eighty million dollars in June.

So for most central banks the stablecoin question is not whether to issue one. It is what happens when their residents hold someone else's.



The flows are already cross-border, and they do not look like SWIFT 👀

The Fund estimates that about ninety percent of stablecoin activity was cross-border in 2025, and that gross cross-border flows of USDT and USDC reached six point three trillion dollars that year. USDT flows exceed USDC flows in every region.

Six point three trillion sounds large until it is placed next to the denominator. The Fund cites an estimate of around one quadrillion dollars for the global cross-border payments market. Stablecoins are a rounding error on that scale, and the paper says so.

What is not a rounding error is the shape. Comparing customer payments on SWIFT with stablecoin flows in 2024, the Fund finds the distribution almost inverted. On SWIFT, flows between advanced economies account for the largest share by value and flows between emerging and developing economies the smallest. For stablecoins, flows between emerging and developing economies were thirty-four percent, flows between those economies and advanced ones fifty-two percent, and flows between advanced economies only fourteen percent.

Read that once more. Eighty-six percent of the stablecoin flows the Fund measured in 2024 had an emerging or developing economy on at least one side. The rail that the rich-country debate treats as a challenger to card networks is, in practice, mostly being used somewhere else.

Holdings follow the same pattern. Proxied by cumulative net inflows since December 2017, emerging markets stand out, and relative to the size of the economy the largest holdings in 2025 were in Venezuela, Ukraine and the Kyrgyz Republic. In dollar terms Europe and Asia and the Pacific hold the most. Measured against GDP, the Americas outside the United States lead, followed by Africa and by the Middle East and Central Asia.



 The measurement is honest about its own limits.

Before going further it is worth repeating something the Fund puts in a box of its own. Measuring cross-border stablecoin flows is hard. Activity is spread across more than thirty blockchains, plus off-chain transfers through exchanges and custodians. Blockchain addresses carry no residency. Transactions carry no economic purpose. Commercial estimates allocate flows to countries using exchange jurisdiction, web traffic or wallet characteristics, and every one of those methods rests on assumptions.

The Fund's own conclusion is that no single method is fully accurate or comprehensive, and that the right data source depends on the question being asked. Anyone quoting the six point three trillion, or the thirty-four, fifty-two and fourteen split, should carry that caveat with the number.



 The cost to beat is the ramp, not the chain 🔍



This is the section that should change how the industry talks about cheaper payments.



The Fund's first annex reviews two recent studies on what it actually costs to send money through what it calls the stablecoin sandwich: fiat converted into a dollar stablecoin, transferred on-chain, and converted back into fiat at the other end.

The more granular one, by Reslow and co-authors, measures the full cost stack across two hundred and seventy directed corridors, eighteen countries, twenty-nine exchanges and more than four thousand complete routes. Assuming users pick the cheapest available on-ramp and off-ramp, the average cost of a two hundred dollar transfer comes out around two percent. That is below the G20 target of three percent and below the global average for traditional remittances.



Then the qualifications, which matter as much as the headline.



In roughly one third of matched corridors, the cheapest traditional provider is still cheaper than the cheapest stablecoin route. Stablecoins win on average. They do not win everywhere.

Trading fees and fiat deposit and withdrawal charges account for most of the average cost. Blockchain transfer fees are less than a quarter of it.

And the biggest driver of the difference between one corridor and another is the stablecoin premium, the gap between the local exchange price of the stablecoin and the benchmark exchange rate. It pushes the cost below zero in some corridors and above eight percent in others.

Put plainly: 
the chain is no longer the expensive part. The expensive part is getting into the dollar and getting out of it, and how the local market prices that dollar on the day. Anyone selling stablecoin payments on the strength of a cheap transfer fee is selling the quarter of the cost that was already solved.

The Fund also notes that both studies measure exchange-based transfers, and that speed and risk are not factored into the cost comparison. The numbers are a cost measurement, not a full verdict.



 The benefits are real, and so are the risks for the countries on the receiving end 😉

The paper is two-sided by design and should be read that way.



, the Fund names faster and cheaper payments, especially across borders where costs remain high, greater competition and innovation, programmable payments, better savings allocation, and broader financial inclusion. Lower remittance costs could raise remittance flows and help smooth shocks. It is explicit that these benefits are worth preserving.



, it names the risks that large-scale adoption of foreign-currency stablecoins could create in recipient countries. Currency substitution, meaning residents holding and transacting in a foreign currency instead of their own. Disintermediation of domestic banks, as deposits move out of the local banking system. Weaker monetary policy transmission. Reduced effectiveness of capital flow management measures. A loss of seigniorage, the income a central bank earns from issuing money, shifting to private and often foreign issuers. And greater vulnerability to shocks the country does not control, from the failure of a large issuer to a run on reserve assets.

The Fund is clear that these impacts are larger where macroeconomic frameworks are weak, payment systems are costly, legal frameworks are incomplete, and data is missing. Its first line of defence is not a ban. It is sound monetary and fiscal frameworks, comprehensive regulation aligned with international standards, better data collection, more efficient domestic payment systems, and international cooperation. It notes that about a quarter of its membership already reports some form of restriction on stablecoins, and that comprehensive regulation is preferable to blanket bans, which are costly to enforce and can push activity out of view.

We think that framing is right, and it is the right frame for anyone building on these rails. A payment network that becomes a channel for macroeconomic instability in the countries it reaches is not a payment network anyone should want to run.



 Where the value actually sits 🤔

The Fund's own breakdown of current demand is the useful corrective here. Most stablecoin activity today still settles crypto-asset trading. Payments and transfers are growing quickly in some places, but stablecoins used for payments account for less than one percent of stablecoins outstanding, according to research the paper cites.

Read alongside the cost annex, that tells you where the open problem is. The transfer is cheap. The ramps are where the cost lives. And the point where a stablecoin stops being a speculative position and becomes a payment is the point of acceptance: a merchant, a supplier, a service provider that receives the dollar, settles in it, and can spend it onward without converting out and back in.

Every time a payment is received in USDC and paid onward in USDC, one off-ramp and one on-ramp disappear from the cost stack. That is not a claim about remittance corridors, which have their own regulated providers and their own local constraints. It is a claim about where the measurable saving actually sits when the transfer itself is no longer the expensive part.



 Where the rest of the stack fits 👀

Meridian Finance is one connected system on

, Circle's Layer 1, rather than a set of products sharing a logo, and the cost annex is the reason the pieces belong together.

Meridian Pay accepts USDC and EURC at checkout, gasless for the payer, settling in under a second. YieldVault wraps Circle USYC so a balance waiting to be spent earns Treasury yield rather than sitting idle, withdrawable at any time, yield from the underlying Treasuries with no fixed or guaranteed rate offered or implied. PaymentStream pays by the second for work delivered continuously rather than monthly. A balance can sit in USDC, EURC, USYC or cirBTC and move between them without leaving the chain. Firmata carries the identity, reputation and conditional settlement layer for agents.

On Arc, gas is paid in USDC and finality lands in under a second, so the asset a merchant is paid in is also the asset the network charges in. There is no separate token to buy and no extra conversion step hidden inside the fee. Circle has also announced 

, an on-chain method for converting between stablecoins such as USDC and EURC, described as launching soon. For a merchant selling in euros and paying suppliers in dollars, that is the conversion the cost annex says is expensive today, moved onto the same ledger as the payment.

The point is not that any of this removes the ramp. It is that a business which can receive, hold, earn on and pay out in the same digital dollar uses the ramp far less often.



 The honest part 🙋‍♂️

All of it runs on Arc testnet, chain 5042002. Twenty contracts, each verified on Arcscan from the second of deploy, roughly one hundred thousand transactions and four thousand on-chain holders. Not mainnet.

Arc's own public mainnet went live on 16 September with eleven founding validators, so the obvious question is why we are not on it. An independent security audit covering the contracts and the front end gates that migration, and it has not happened yet. We could have pushed the same bytecode the week Arc launched. We did not.

For a piece built on a paper about the risks foreign dollars can carry into economies that did not issue them, that matters. Asking anyone to route real money through contracts that no independent party has reviewed would be the wrong way round.





Three things, each of which the Fund's own framework makes measurable.

Whether the payment share moves. Less than one percent of stablecoins outstanding being used for payments is the number that says how far the technology is from its stated purpose. If it rises while trading activity stays flat, the use is changing.

Whether the stablecoin premium narrows. It is the single biggest driver of corridor-to-corridor cost differences in the annex. A narrowing premium would mean local markets for digital dollars are deepening and becoming more competitive.

And whether the measurement improves. The Fund's statistics work, including the G20 data gaps initiative on digital money, is trying to bring stablecoin positions and flows into official statistics on a consistent basis. Every argument in this piece, for or against, gets better when the six point three trillion stops being an estimate built on assumptions.



Does the IMF say stablecoins are good or bad for emerging economies 

❓

Neither, and it would be a poor reading to pick one. The paper names real benefits, including cheaper and faster cross-border payments, competition and inclusion, and real risks for recipient countries, including currency substitution, bank disintermediation, weaker monetary transmission, reduced effectiveness of capital flow measures and loss of seigniorage. It argues the policy response should be country-specific and should balance the two. It endorses no provider.



Are stablecoin transfers cheaper than traditional remittances 

❓

On average, under the assumption that users pick the cheapest available routes, a study reviewed by the Fund measured about two percent for a two hundred dollar transfer, below both the G20 target and the global average for traditional remittances. But in roughly one third of matched corridors the cheapest traditional provider was still cheaper, and most of the cost sits in trading and fiat ramp fees rather than in the blockchain transfer.



How reliable is the six point three trillion dollar figure 

❓

It is an estimate, and the Fund says plainly that no single method for measuring cross-border stablecoin flows is fully accurate or comprehensive. Activity spans more than thirty blockchains plus off-chain transfers, and addresses carry no residency, so flows are allocated to countries using assumptions. It should be quoted with that caveat.



Does Meridian perform anti-money-laundering or know-your-customer checks 

❓

No. Where a merchant, broker or institution is the counterparty, that party keeps its own customer due diligence and its own regulatory obligations exactly as it does today. What the stack provides is settlement and proofs.



❓

No. The stack runs on Arc testnet, chain 5042002, with every contract verified on Arcscan. Migration is gated by an independent security audit covering the contracts and the front end. Testnet live, audit before mainnet.



: Initial Considerations on Policies to Manage and Enhance Macrofinancial Stability, International Monetary Fund, Departmental Paper, October 2026, including its Annex 1 reviewing Reslow et al. (2026), Deconstructing the Stablecoin Sandwich, and Du, Huang and 

 Competing Rails for Cross-Border Payments.


, Global Cross-Border Payments: A $1 Quadrillion Evolving Market?, IMF 

, International Stablecoin Flows, Capital Controls and Currency Crises, IMF Working Paper, as cited by the Fund for the flow and holdings estimates.

Built on Arc, Powered by Circle.



Not investment advice. Nothing here endorses any provider or forecasts the decisions of any regulator.

🌍 The IMF Counted Where On-Chain Dollars Actually Go. Most of the Flows Touch an Emerging Economy, and the Cost to Beat Is Not the Chain.

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