Fifth Conference on the International Roles of the U.S. Dollar: Stablecoins, Digital Payments, and the International Role of the U.S. Dollar

July 16, 2026

Fifth Conference on the International Roles of the U.S. Dollar: Stablecoins, Digital Payments, and the International Role of the U.S. Dollar

Ricardo Correa, Linda Goldberg, Ritt Keerati, Juan M. Londono, and Fabiola Ravazzolo¹

The U.S. dollar continues to occupy a central role in the global economy. It remains the most widely used currency in foreign exchange transactions and cross-border payments, the leading currency in official reserve holdings, and the dominant currency of denomination for international debt securities and loans. This dominant position reflects several enduring features of the U.S. economy and financial system, including the size and strength of U.S. economy, the depth and liquidity of U.S. financial markets, and enduring confidence in U.S. institutions.

On June 22 and 23, 2026, the Federal Reserve Board and the Federal Reserve Bank of New York jointly hosted the fifth installment of the International Roles of the U.S. Dollar Conference.² Building on previous conferences that examined the dollar's resilience amid geopolitical change, safe-asset demand, and evolving payment systems, this year's event centered on the implications of financial innovation, especially digital assets and stablecoins, for the ways in which households, businesses, and financial intermediaries access, transfer, and hold dollar-denominated assets.³

In opening remarks, Federal Reserve Governor Christopher Waller argued that the dollar's international role continues to rest on the fundamental strengths of the U.S. economy and financial system.⁴ At the same time, he noted that technological innovation, including distributed ledger technology and tokenized assets such as stablecoins, is creating new channels for global dollar intermediation. Governor Waller noted that new entrants associated with these technologies should largely complement the traditional financial sector and lead to more competition, which generally leads to better outcomes for both consumers and society as a whole.

Cornell University Professor Eswar Prasad placed these themes in a broader historical context in his keynote address. He argued that the global monetary system is entering a period of renewed competition between public and private forms of money, with digital currencies increasingly serving as mediums of exchange while central bank money remains the primary settlement asset and store of value. Professor Prasad highlighted growing concerns about monetary sovereignty, as digital currencies expand across borders, but expressed skepticism that these developments will substantially diminish the dollar's international role, given the absence of credible alternatives and the continued importance of network effects. He closed by emphasizing the need for public-sector infrastructure to evolve alongside private innovation to preserve monetary and financial stability.

A panel on financial innovation and the future of the dollar's international role brought together views from academia, multilateral organizations, central banks, and the private sector, featuring Fabio Natalucci, Gordon Liao, José Manuel Marqués, Neha Narula, and Athanasios Vamvakidis. Panelists identified stablecoins and advances in cross-border payment systems as among the innovations most likely to shape the future international monetary system, and several argued that this growth is likely to reinforce, rather than erode, the international use of the dollar, since the dominant stablecoins are overwhelmingly dollar-denominated and are increasingly used for international payments, trade, and settlement.

The conference also featured a presentation of the recent Committee on the Global Financial System (CGFS) report, Foreign Currency Funding Risk and Cross-border Liquidity, by Stephanie Curcuru (Federal Reserve Board) and Bryan Hardy (Bank for International Settlements).⁵ The report highlighted the central role of U.S. dollar funding in the international banking system and the importance of resilient cross-border dollar funding markets for global financial stability. Even as new technologies reshape how dollars are transferred and intermediated, the dollar remains the dominant funding currency underpinning international financial activity.

Three broad themes emerged from the paper presentations and discussions that followed.

Stablecoins are expanding access to dollar-based finance

First, stablecoins are rapidly becoming integrated into the infrastructure of international finance, broadening access to dollar-denominated financial services rather than operating as a separate, self-contained crypto ecosystem. Tony Zhang (Arizona State University) presented a clear illustration of this shift, showing that dollar-denominated stablecoins are increasingly functioning as tokenized money, with transaction volumes now exceeding those of Bitcoin and growing use in payments, savings, and programmable transactions. Other papers reinforced this finding from different angles: Wenxin Du (Harvard Business School) showed that stablecoin-based payment rails can lower the cost of certain crossborder transactions, complementing rather than replacing correspondent banking; Ganesh Viswanath-Natraj (University of Warwick) documented the emergence of blockchain-based foreign exchange markets, in which stablecoins linked to different fiat currencies increasingly exhibit the price discovery and arbitrage mechanisms found in traditional foreign exchange markets; and Daniele Siena (Politecnico di Milano) argued that stablecoins are becoming an important intermediary linking global payment demand to U.S. Treasury markets through their reserve holdings. Taken together, these papers point to stablecoins increasingly performing functions traditionally associated with payment systems, foreign exchange markets, and financial intermediaries.

New technologies bring new channels of transmission

A second theme was that as digital financial markets become more integrated with traditional financial markets, they create new channels through which shocks can propagate. Eugenio Cerutti (IMF) offered evidence of this channel, finding that stablecoin demand shocks affect Treasury yields, exchange rates, and equity prices. Similarly, Federico Grinberg (IMF) showed that stablecoin flows can affect exchange rates, covered interest parity deviations, and dollar funding conditions, particularly when arbitrage is constrained. Lastly, Julia Schmidt (Banque de France) showed that stablecoins may expand the global investor base for dollar safe assets and alter the incentives surrounding sovereign debt issuance.

Traditional drivers of dollar demand remain powerful

The third theme was the continued importance of longer-standing drivers of dollar demand. Torsten Ehlers (Bank for International Settlements) provided evidence showing that portfolio rebalancing by global investors remains a major determinant of exchange-rate movements and international capital flows. Benedikt Ballensiefen (University of Cologne) reached a complementary conclusion, showing that expectations about future dollar appreciation shape dollar demand across spot, swap, and forward markets. Several of the stablecoin papers described above similarly traced their findings back to underlying demand for dollar liquidity, safe assets, and funding markets, suggesting that new technologies are, so far, channeling rather than replacing established sources of dollar demand.

Conclusion

Taken together, the discussions at this year's conference suggest that the international role of the dollar is entering a new phase. Stablecoins, tokenized assets, and new payment technologies are expanding the ways in which dollars can be accessed, transferred, and held across borders, while forging closer links between digital markets and traditional financial markets. Yet these innovations do not appear to be fundamentally altering the factors that underpin global demand for dollars. Instead, they are largely building on an international monetary system that continues to rely on the depth of U.S. financial markets, the availability of dollar-denominated safe assets, and confidence in U.S. institutions. At the same time, supporting this evolution will require policy frameworks to adapt to a financial system in which liquidity is increasingly distributed across multiple digital platforms and financial activity is occurring at ever greater speed. Looking ahead, the key questions may be less about whether financial innovation will replace the dollar, and more about how these new technologies will reshape the channels through which the dollar's international role occurs, the considerations that accompany that evolution, and the policy frameworks needed to support a more digitalized global financial system.