[2026 Financial Forum] Paul Blustein: "Stablecoins Are Not the Solution to Dollar Hegemony... May Disrupt Financial Order"

Industry’s Claims of ‘Maintaining Dollar Hegemony’ Called “Exaggerated Logic”
Risks of Weakened AML and KYC Regulations...Control of Dollar Settlement Network Is Key
Concerns Over Threats to Monetary Sovereignty in Emerging Markets...Attention on Korea’s Tokenized Deposit Model

"Even if the dollar’s hegemony is shaken, stablecoins are by no means the answer. On the contrary, they risk undermining anti-money laundering frameworks and could seriously weaken the monetary sovereignty of nations."

Paul Blustein, an economic journalist, attended the "2026 Asia Financial Forum" hosted by The Asia Business Daily at Chosun Hotel in Jung-gu, Seoul on the 21st. He is giving a lecture on the topic "Stable Coins and the Dollar: Between Expectations and Reality." 2026.5.21 Photo by Jinhyung Kang

Paul Blustein, economic journalist and author of "King Dollar," issued this warning at the 2026 Asia Financial Forum held at The Westin Chosun Seoul in Jung-gu, Seoul, on May 21, under the theme "Great Transformation in Future Finance: The Era of Productive Capital and the New Financial Order."

The Dollar’s Hegemony Is Rooted in Treasury Liquidity...The ‘Stablecoin Solution’ Is a Myth

Blustein pointed out that the current digital asset industry regards stablecoins as a key tool for maintaining U.S. national security and dollar dominance. "Originally, digital assets were conceived as systems designed to function without government or bank intermediaries, but now they are being promoted as technologies to preserve dollar hegemony," he noted.

Regarding the industry’s claims, Blustein stated that they are "highly exaggerated or based on faulty logic," and asserted that "the dollar’s international status already stands on a very strong foundation, even without stablecoins." He explained that throughout history, whenever challenges to dollar dominance have emerged—such as the collapse of the Bretton Woods system, the high inflation of the 1970s, the introduction of the euro, the global financial crisis, or the rise of China—the dollar-centric system has ultimately endured.

He cited the overwhelming liquidity of the U.S. Treasury market and the openness of U.S. capital markets as the core foundations of dollar hegemony. According to Blustein, the true power behind the dollar is the massive financial infrastructure that allows U.S. Treasuries to be bought and sold in vast quantities with minimal market shock, while global capital can flow freely in and out of the U.S. market without restrictions.

Blustein also highlighted the fatal risks that could arise from the widespread adoption of stablecoins, specifically illegal financial transactions and the potential for evading U.S. financial sanctions. "Stablecoins essentially function as bearer assets that bypass the banking system," he warned, "which could fundamentally weaken the anti-money laundering (AML) and know-your-customer (KYC) regulatory frameworks that underpin the international financial order."

He further explained that the dollar-based sanctions system does not operate simply by "banning the use of the dollar." The core of dollar-based sanctions is that banks worldwide require access to the dollar settlement network for international transactions, and the U.S. leverages this to create powerful sanctioning effects. The United States can exclude banks that deal with sanctioned entities from the dollar settlement network, which in turn shapes the global financial order.

"Monetary Sovereignty of Emerging Markets May Be Undermined"

Economic journalist Paul Bluestein is attending the '2026 Asia Financial Forum' hosted by The Asia Business Daily at the Chosun Hotel in Jung-gu, Seoul, on the 21st, delivering a lecture on the topic 'Stablecoins and the Dollar: Between Expectations and Reality.' 2026.5.21 Photo by Kang Jin-hyung

Blustein also warned about the rapid spread of "dollarization"—a phenomenon where economies become excessively reliant on the U.S. dollar—in emerging markets. If citizens in emerging economies with unstable macroeconomic environments begin to use dollar-based stablecoins indiscriminately instead of their national currencies, the influence of central banks’ monetary policy will inevitably be neutralized. Blustein observed, "In countries with stable financial systems like Korea, the issue is relatively less severe, but in less developed or emerging economies where there is a high risk of capital flight, this could become a trigger for financial crises." He dismissed as overly unrealistic the optimistic view that sound government policies alone could solve the problem, emphasizing that the erosion of monetary sovereignty is an unavoidable reality.

However, he did not deny the technological innovation or certain positive aspects of stablecoins. He acknowledged that for small business owners or citizens of countries facing hyperinflation or strict capital controls—who are excluded from the global banking system—stablecoins can serve, to some extent, as alternative stores of value. He also highly valued the scalability of "programmable money," such as automated payments or automatic crop insurance payouts based on blockchain smart contracts.

Nevertheless, he argued that the industry’s claims about dramatically reducing remittance costs are still overhyped. While some fees may decrease during cross-border transfers, these savings are often offset by the currency exchange and withdrawal costs incurred when recipients ultimately convert funds into local currency. He pointed out that, in fact, existing advanced fintech services could be more efficient in terms of cost and speed.

In conclusion, Blustein suggested that rather than imposing a blanket ban on the new technology of stablecoins, it is necessary to recognize their potential for innovation while managing risks within a robust regulatory framework—a "principle-based regulation" approach.

Lastly, he emphasized, "Korea is already serving as a model and milestone for the world in the process of digital financial transformation and infrastructure development. The ongoing experiments in Korea’s financial sector with deposit tokenization models and the won-based stablecoin model—controlled under regulatory oversight—will become extremely important global reference cases in the future reorganization of international monetary systems."

This content was produced with the assistance of AI translation services.