Weak Currencies Drive $1 Trillion Exodus to Stablecoins as Banks Lose Ground

Standard Chartered has warned that up to $1 trillion in deposits could flow from emerging market banks into U.S. dollar-pegged stablecoins by 2028, driven by growing demand for digital alternatives to traditional banking systems. In a report released on October 6, 2025, the bank projected that stablecoin savings in emerging markets could surge from approximately $173 billion to $1.22 trillion over the same period, implying a potential outflow of over $1 trillion from traditional banks. This shift is attributed to factors such as weak local currencies, high inflation, and limited access to U.S. dollars, which are pushing users toward stablecoins as a trusted, liquid, and accessible store of valueStablecoins could see $1 trillion in inflows from emerging markets ...^[1].

The report highlights that stablecoins are increasingly serving as a substitute for U.S. dollar accounts in emerging markets, where unbanked populations and inflationary pressures create a demand for alternative financial tools. The bank noted that even after the passage of the U.S. GENIUS Act in July 2025-which prohibits stablecoin issuers from offering direct yields-adoption is expected to persist due to the prioritization of capital preservation over returns. This trend is further accelerated by technological advancements and regulatory clarity, with the global stablecoin market projected to reach $2 trillion by 2028, of which two-thirds will originate from emerging marketsStablecoin News: Emerging Market Banks Could Suffer - CoinDesk^[2].

Countries most vulnerable to deposit outflows include Egypt, Pakistan, Colombia, Bangladesh, and Sri Lanka, where local currency instability and capital controls exacerbate reliance on stablecoins. Additional high-risk markets identified by the report are India, Brazil, South Africa, and Kenya. In these regions, stablecoins are being adopted for cross-border remittances, business transactions, and personal savings, bypassing traditional banking infrastructure. For instance, in Venezuela, where annual inflation exceeds 200%, stablecoins like USDT have become a primary medium of exchange, with local businesses and individuals using them for daily transactionsStandard Chartered: Over $100 billion will flow into stablecoins …^[3].

The report also underscores the structural implications of stablecoin adoption for emerging market banks. As stablecoins absorb deposits, traditional banks may face reduced lending capacity and disrupted correspondent banking relationships. However, some institutions are adapting by exploring stablecoin-based settlement systems or holding reserves for stablecoin issuers. Standard Chartered emphasized that the shift is not merely speculative but reflects a fundamental reconfiguration of financial systems, with stablecoins offering lower credit risks compared to traditional banks in volatile economiesStandard Chartered Flags $1T Stablecoin Shift - coin360.com^[4].

Regulatory developments, such as the GENIUS Act, aim to mitigate risks associated with stablecoin yields but are unlikely to deter adoption. The bank noted that stablecoins provide 24/7 liquidity and transparency, which are critical in environments where local banking services are unreliable. Additionally, emerging market regulators are experimenting with central bank digital currencies (CBDCs) and upgraded payment systems, though the report cautions that delayed adaptation could exacerbate financial vulnerabilities. In contrast, developed economies are integrating stablecoins into institutional frameworks, with applications in corporate treasuries and cross-border settlementsStablecoin Adoption and Regional Usage in 2024 and 2025: What …^[5].

The projected growth of stablecoins underscores their role in reshaping global finance, particularly in regions where traditional systems are inadequate. As demand for digital dollars expands, emerging market banks face a critical juncture: either evolve their infrastructure to accommodate stablecoin integration or risk being bypassed by a borderless alternative. Standard Chartered's analysis highlights the urgency for policymakers to address systemic risks while harnessing the efficiency gains offered by stablecoins in an increasingly digital financial landscapeStandard Chartered Forecasts $1 Trillion Flow Into Stablecoins …^[6].