Economic Instability Drives $1T Shift to Stablecoins in Emerging Markets by 2028

Standard Chartered Bank has issued a warning that up to $1 trillion in deposits from emerging market banks could shift to dollar-backed stablecoins by 2028, driven by growing demand for stable, liquid alternatives to volatile local currencies. The bank projects the global stablecoin market could expand to $2 trillion by 2028, with approximately two-thirds of this demand originating from emerging economies. This migration, it argues, reflects a post-financial-crisis trend of non-bank entities capturing core banking functions, particularly in regions grappling with inflation, currency instability, and weak financial systemsStablecoin News: Emerging Market Banks Could Suffer - CoinDesk^[1].

The report highlights that stablecoin adoption is most pronounced in countries like Egypt, Pakistan, Bangladesh, and Sri Lanka, where households and businesses seek to preserve capital amid economic uncertainty. Even without offering interest under the U.S. GENIUS Act, which prohibits yield generation for compliant stablecoin issuers, stablecoins remain attractive for capital preservation. Standard Chartered estimates that emerging market stablecoin "savings" could surge from roughly $173 billion today to $1.22 trillion by 2028, implying a significant outflow from traditional banking systems.

The U.S. Treasury has echoed this assessment, noting that stablecoin issuers could become major holders of U.S. government securities. A Treasury Borrowing Advisory Committee (TBAC) report cited Standard Chartered's forecast and projected that half of the $2 trillion stablecoin market by 2028 could be invested in U.S. Treasuries, translating to over $1 trillion in demand for the sectorStablecoins to hold $1T in US Treasuries by 2030: report^[3]. This aligns with broader institutional interest, as companies like Visa and Stripe explore integrating stablecoins into payment systems, particularly in Latin AmericaStablecoins on Steroids: Treasury Predicts $1T+ Boom by 2028^[2].

Geographic vulnerability varies, with Egypt, Pakistan, Colombia, Bangladesh, and Sri Lanka identified as most exposed to deposit flight. Broader risks include Turkey, India, Brazil, and South Africa, where factors such as inflation trajectories, capital-account openness, and monetary credibility will shape adoption rates. Standard Chartered warns that such shifts could pressure emerging market banks' liquidity, correspondent banking relationships, and cross-border revenue streams, though banks could mitigate risks by custodizing stablecoin reserves or embedding them into treasury operations.

Regulatory responses are mixed. While some emerging markets are piloting central bank digital currencies (CBDCs) and upgrading fast-payment infrastructure, others face challenges in balancing innovation with oversight. The U.S. Treasury has emphasized the need for frameworks addressing money laundering and systemic stability risks, while policymakers debate the GENIUS Act's efficacy. Despite regulatory uncertainty, market forces suggest stablecoin adoption will accelerate, particularly as non-USD stablecoins gain traction in regions where dollarization is less feasible.

The projected shift underscores a structural transformation in global finance. For emerging markets, stablecoins offer cheaper remittances and faster transactions but threaten traditional banks' role as intermediaries. Conversely, the U.S. could benefit from stablecoin issuers becoming key holders of Treasuries, though this depends on regulatory clarity. Standard Chartered concludes that a trillion-dollar shift from bank deposits to stablecoins is no longer a speculative scenario but a "base case" outcome, reshaping financial ecosystems and prompting urgent adaptation by banks and regulators.