Demand for dollar-backed stablecoins can push national currencies lower once a global exchange lets investors buy the tokens directly with local fiat money. That is the core finding of a Bank of Korea study published September 3, which examined what happened when Binance introduced direct fiat-stablecoin trading pairs across a dozen currencies.
The paper, written by Jihyun Kim and Sangheum Cho of the central bank International Department, looked at USDT and USDC purchases in 12 currencies with enough cross-exchange data, with pairing dates from 2019 to 2025. According to CoinDesk, local stablecoin premiums fell by about 0.33 to 0.38 percentage points after Binance opened the pairs.
The mechanism runs through market makers
When a fiat-stablecoin pair goes live on a global exchange, professional market makers act as counterparties to retail buyers. After supplying the stablecoins, those market makers hold the local currency and sell it in the foreign exchange market to rebuild their dollar positions. That sequence turns crypto buying pressure into actual currency selling, and it works without any single trader intending to move the exchange rate.
The study found stablecoins also flowed from Binance to local exchanges whenever local prices rose above the global platform price, consistent with ordinary arbitrage. In a separate weekly test, a one-standard-deviation rise in Google searches for bitcoin, used as a proxy for investment demand, was linked to a 0.118% depreciation of the Brazilian real and a 0.109 percentage point rise in the local stablecoin premium.
Korea felt the premium, not the depreciation
South Korea makes an instructive contrast because it has no direct Binance won-stablecoin pair. The same demand shock raised the Korean stablecoin premium by about 0.85 percentage points but had no statistically significant effect on the won. The money still moved toward dollar tokens, but without global intermediaries in the middle, the pressure stayed inside the local market instead of hitting the exchange rate.
That may not last. Won-denominated stablecoin purchases reached $64 billion in the 12 months through June 2025, the largest volume for any local currency in Asia-Pacific, according to Chainalysis. Korean rules currently restrict corporate and foreign participation, and if those limits loosen while global exchanges add won pairs, the Brazilian pattern becomes more relevant than the Korean one.
The paper carries weight beyond Korea. An IMF working paper on stablecoin inflows and FX markets found inflows depreciate local currencies and widen parity deviations, and the BIS Annual Economic Report reached a parallel conclusion using 593 million event logs and hundreds of millions of transactions. Researchers at major central banks now treat stablecoin demand as a live transmission channel into FX markets, not a niche curiosity.
What the bank wants next
The authors suggested that any regulatory change expanding crypto participation in Korea should be planned alongside efforts to internationalize the won and deepen FX liquidity, so the market can absorb shocks if stablecoin demand and exchange rates become directly linked. The Bank of Korea has separately pushed for a bank-led stablecoin rollout, with Korean banks holding majority control of any issuing consortium, and continues work on Project Hangang, its won-backed tokenized deposit infrastructure.
Seoul Economic Daily reported that the bank sees the risk in plain terms: the easier it is to buy dollar tokens in won, the more that trading translates into dollar demand and upward pressure on the won-dollar rate, meaning a weaker won. The full paper is available on the Bank of Korea site.
For policymakers in emerging markets, the numbers are small but directional. Basis points of depreciation per demand shock will not crash a currency, but they compound, and they arrive exactly when domestic residents are most eager to move money into dollars. That is when a central bank least wants unmonitored dollar demand siphoning through a crypto exchange.
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