Stablecoins have quickly moved from the periphery of digital finance to the center of debates on monetary sovereignty. In broad terms, how do you see their rise reshaping the global currency order?

The rise of stablecoins can best be understood through both regulatory and geoeconomic perspectives. Historically, it is worth noting that the shift introduced by the GENIUS Act is part of a broader reconfiguration of global finance since the 2008-09 GFC crisis, when concerns over the return of capital controls and the contest amongst nation states on retaining currency values came to the fore. With USDT (Tether) and USDC (USD Coin) acting as the main players in USD denominated stablecoins, many nations are thinking about how to proceed forward on their own policy choices, concerned about potential capital drains to the U.S should they fail to establish stablecoins anchored in their own currencies.

From a regulatory standpoint, the key issue is how states can maintain monetary sovereignty in digital finance amid the absence of a global regulatory architecture. Since the GFC, we have witnessed volatile cryptocurrency cycles (most notably Bitcoin), diverging national approaches to regulation, and high-profile enforcement actions such as the SEC’s lawsuits under the Biden administration, particularly against Ripple, to determine whether tokens should be treated as securities. The collapse of FTX further underscored the risks of an unregulated ecosystem. Presumably, removing regulatory barriers was crucial to push stablecoins forward, but depending on how they function domestically in the U.S. and abroad, we are yet to see their potential in “reshaping the global currency order”. 

The GENIUS Act has been described as the first comprehensive framework for stablecoin regulation. Do you think it strengthens U.S. monetary primacy by formalizing dollar-backed stablecoins, or does it create new vulnerabilities? 

From a geoeconomic standpoint, the rise of stablecoins can be seen as the creation of a mechanism that reduces reliance on SWIFT (as is the case with CBDCs), allowing both public and private entities to retain leverage in cross-border transactions and maintain visibility in global financial circulation. This raises vulnerabilities for the United States, whose financial sanctions – such as Treasury-led asset freezes – are largely enforced through SWIFT. If stablecoins become the norm, pressure to adapt U.S. financial mechanisms will intensify. The election of Trump, coupled with major holders beginning to unload U.S. Treasury bills, has accelerated this shift and culminated in the GENIUS Act.

Clearly, the presence of the U.S. dollar seems critical in pushing this path forward, as stablecoins issued in U.S. dollars are to be backed primarily by US treasury bills. It is anticipated that most countries that have sophisticated financial markets will not only have industry players searching for opportunities, but authorities actively looking to take control by issuing their own stablecoins or pre-emptive mechanisms. However, in the absence of coordinated strategies, the formalisation of stablecoins is likely to reverberate unevenly across economies. 

How are other major blocs – the EU with its digital euro, China with the e-CNY, and the Gulf states – likely to respond to U.S. first-mover advantage in regulation? Could we see competing regulatory ecosystems emerge, or eventual convergence toward common standards?

Other key currency-issuing economies, such as the EU and Japan, have remained cautious in their approaches. The EU, for instance, has effectively denied USDT entry through the Markets in Crypto-Assets Regulation (MiCA) framework, reflecting its guarded stance on foreign stablecoins. China, by contrast, has pursued CBDCs as part of its broader effort to internationalize the renminbi. This has included the expansion of cross-border interoperability experiments under the BIS-led Project mBridge, which initially linked the central banks of China, Hong Kong, Thailand, and the UAE, and later garnered various central banks to conduct pilots in their jurisdictions.

Much of this debate has revolved around whether to prioritize retail or wholesale CBDCs. In the U.S., the Biden administration and the Federal Reserve were initially opposed to CBDCs but later leaned towards exploring them, with competitiveness between the Boston Fed and the New York Fed resulting in retail and wholesale CBDC prototype developments, respectively. By December 2024, however, the BIS formally exited mBridge, declaring its objectives complete. Whether China will ultimately introduce its own stablecoins remains uncertain, though it is clear that they will continue with their CBDC prerogatives.

Given your research on the Gulf’s role in digital transitions, do you foresee stablecoins or CBDCs playing a role in trade settlements between the Gulf, Asia, and the West? Could this shift alter the dollar’s role in commodity markets? 

Historically, these states have been anchored to the U.S. dollar through the petrodollar system, but they are now beginning to assess how digital currencies might enhance – or disrupt – their financial and geopolitical positions. Although debates about the decline of the petrodollar persist, there is little evidence to suggest the emergence of a fully formed “petro-yuan” or any single viable successor. Nevertheless, the very fact that such alternatives are being explored underscores the urgency with which financial diversification is being pursued in key sectors of the global economy.

Some Gulf states have begun cautiously engaging with digital assets – not by liberalizing trading or fully embracing cryptocurrency, but through strategic investment. Sovereign wealth funds (SWFs) and government-linked institutions are increasingly allocating capital to blockchain ventures, digital payment infrastructure, and asset tokenization platforms. This reflects a risk-managed approach to innovation: testing the waters while maintaining core regulatory controls. In this context, for Gulf states, it is clear that digital finance is viewed less as a disruptive force and more as a potential asset class and a hedge against future instability. 

Moving forward, for energy-exporting economies in particular, such as those in the Gulf, I see risk-averse attitudes suggesting that transitions will unfold gradually, with carefully calibrated steps rather than rapid adoption.Gulf find themselves at the heart of this transition. Moving forward, for energy-exporting economies in particular, such as those in the Gulf, I see risk-averse attitudes suggesting that transitions will unfold gradually, with carefully calibrated steps rather than rapid adoption. 

Lastly, for our readers – many of whom are students, young researchers, and policy enthusiasts – what advice would you give on how to think about the future of currency power in such a rapidly shifting landscape?

For someone interested in currencies and economic relations more broadly in this tumultuous era, I would recommend looking beyond the day-to-day fluctuations of financial markets and reflecting on the major turning points in post-war global finance where power was most visibly exercised. For example, the creation of the Bretton Woods system, the Nixon Shock, the Plaza Accord, the cyclical crises such as the Asian Financial Crisis (AFC) and the Global Financial Crisis (GFC).

Situating developments in digital finance from crypto and CBDCs to stablecoins in recent years against these precedents helps reveal that phenomena such as ongoing tariff wars or monetary frictions are not entirely new, but rather variations of older dynamics expressed through new instruments. Importantly, I encourage economic enthusiasts to travel across jurisdictions of their choice to observe firsthand how currencies are transacted and embedded in daily economic life.

We thank Dr. Park for taking the time to share her insights and we look forward to keeping up with her work.