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Stablecoin flows and spillovers to FX markets

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a synthesis of Flesch-Kincaid, Coleman-Liau, SMOG, and Dale-Chall readability metrics
Stablecoin flows and spillovers to FX markets Summary Focus Stablecoin markets have grown rapidly, with more than 70% of fiat-to-stablecoin conversions originating from non-US dollar currencies. Since buying a dollar-pegged stablecoin with a local currency is effectively a foreign exchange (FX) transaction, this growth has given rise to a parallel, crypto-based FX ecosystem. How connected is this ...
The strongest version of this narrative highlights a critical evolution in global finance: stablecoins are no longer isolated within crypto ecosystems but are actively shaping traditional FX markets. The research rigorously documents how stablecoin demand generates spillovers, depreciating local currencies and tightening dollar funding conditions. By grounding its claims in granular data and a theoretical model of constrained arbitrage, the analysis avoids exaggeration and presents a measured ca...