Introduction
A new report from Standard Chartered warns that as much as one trillion dollars could move out of emerging market bank deposits and into dollar-pegged stablecoins within the next three years. The finding reflects growing uncertainty around local currencies, continued inflationary pressure, and the increasing accessibility of digital assets. For many savers and businesses, stablecoins offer a safer and more liquid alternative to traditional deposits in volatile economies.
The projection highlights deep structural risks for the banking sectors of developing nations. If such a massive capital shift occurs, it could reduce liquidity, strain credit availability, and weaken domestic monetary control. The study also reinforces the growing role of stablecoins in global finance, suggesting that what began as a niche digital innovation could soon become a mainstream store of value across emerging markets.
How Standard Chartered Reached the One Trillion Dollar Estimate
The report’s methodology begins by analyzing the current scale of stablecoin holdings in developing economies, which Standard Chartered estimates at roughly one hundred seventy billion dollars. It then projects accelerated adoption driven by persistent inflation, currency volatility, and the expansion of digital payment infrastructure. Under these conditions, total holdings could exceed one point two trillion dollars by 2028, implying an outflow of nearly one trillion dollars from traditional banking deposits.
The bank’s economists modeled the effect across sixteen high-risk countries, including Turkey, India, Egypt, Pakistan, and Brazil. They found that even a small percentage of deposit migration in each could produce major cumulative outflows. Because nearly all stablecoins are pegged to the U.S. dollar, these conversions represent a large-scale transfer of financial assets from domestic to dollar-based systems. In essence, local deposits would be replaced by digital claims backed by U.S. dollar reserves, linking emerging economies more tightly to dollar liquidity.
Drivers Behind the Shift to Stablecoins
The most important driver of this transition is the loss of confidence in local currencies. High inflation and depreciation have eroded the value of savings in many emerging economies, prompting individuals and companies to seek assets tied to stronger currencies. Stablecoins provide a convenient digital substitute for holding physical dollars or maintaining foreign bank accounts. They are accessible through smartphones, simple to transfer, and easily converted into local currencies when needed.
Digital accessibility has accelerated the trend. Over the last decade, mobile internet coverage in developing regions has expanded rapidly, giving millions of users access to crypto wallets and payment apps. Converting local currency into stablecoins has become almost as easy as sending a domestic bank transfer. This convenience, combined with rising familiarity, has turned stablecoins into a practical savings tool for small businesses, freelancers, and households seeking stability.
Institutional factors also play a role. Fintech companies and regional payment providers are integrating stablecoins into cross-border settlements and remittances. For firms dealing with volatile exchange rates, stablecoins can act as short-term hedging instruments or liquidity buffers. As these networks scale, they create feedback loops that draw more participants into the system.
Challenges and Risks to the Projection
The forecast assumes that emerging market regulators allow stablecoin adoption to grow freely, but that outcome is not guaranteed. Many governments view stablecoins as potential threats to monetary sovereignty and financial stability. Some have already introduced capital controls or licensing requirements for exchanges and wallets. If similar restrictions spread, stablecoin growth could slow or move into informal channels that are harder to monitor.
Maintaining user trust will also be crucial. Stablecoins depend on transparent reserves and reliable redemption mechanisms. Any major depegging event or liquidity shortfall could damage confidence and trigger rapid withdrawals. In markets prone to financial stress, a crisis of trust could unfold quickly, reversing capital flows back toward traditional assets.
Competition from central bank digital currencies could further reduce growth potential. Several emerging markets are developing their own digital currencies to provide a state-backed alternative. If central bank digital currencies become widely available and easy to use, citizens may prefer them to privately issued tokens. Such competition would limit the share of savings migrating to private stablecoins.
Macroeconomic conditions also matter. A global rise in interest rates, tightening liquidity, or a stronger dollar could reduce investor appetite for digital assets. In those environments, savers might favor conventional deposits or short-term government securities over stablecoins. These cyclical factors make the trillion-dollar scenario ambitious, though not impossible.
Market and Regulatory Implications
If large capital outflows occur, emerging market banks could face liquidity shortages and higher funding costs. To retain deposits, banks may need to offer higher interest rates or attract external financing. Smaller institutions with weaker balance sheets could struggle to compete, increasing systemic risk. Central banks might intervene through emergency credit facilities or capital flow measures to stabilize local markets.
On the global scale, increased adoption of dollar-pegged assets could strengthen demand for U.S. Treasury securities and money market instruments. Stablecoin issuers back their tokens with these assets, meaning growth in circulation directly channels new capital into U.S. financial markets. This dynamic may reinforce dollar dominance but also heighten regulatory scrutiny from U.S. authorities concerned about systemic exposure.
Regulators in emerging economies will likely respond with new frameworks. Expect requirements for licensing, reserve disclosure, redemption timelines, and foreign exchange monitoring. Some governments may attempt to integrate stablecoins into domestic payment systems rather than banning them outright. Others could tighten restrictions to prevent dollarization. The balance between innovation and control will vary by country.
Stablecoin issuers, meanwhile, will compete to establish credibility in these markets. Those offering transparent auditing, strong liquidity management, and compliant operations will gain user trust. Issuers unable to maintain reliable backing or regulatory relationships may be excluded from institutional adoption even if retail demand persists.
Conclusion
Standard Chartered’s warning that up to one trillion dollars could flow from emerging market bank deposits into stablecoins within the next few years underlines how fast digital assets are reshaping global finance. The combination of inflation, weak currencies, and improved digital access makes stablecoins a compelling refuge for savers seeking security and liquidity.
Whether this migration materializes fully depends on policy responses, regulatory clarity, and the resilience of issuers. Yet even partial realization would mark a profound shift in how capital moves between traditional and digital systems. For emerging markets, the challenge is balancing innovation and stability while preventing destabilizing outflows. For the world’s financial system, it is another sign that digital dollars are no longer an experiment but an emerging pillar of global money.
