South Africa’s central bank echoes concerns from Standard Chartered regarding the potential destabilization of emerging-market banks due to the rapid rise of stablecoins.
Standard Chartered has issued a stark warning, projecting that the introduction and growth of digital dollar equivalents could lead to an outflow of up to $1 trillion from emerging-market bank deposits over the next three years. This anticipated drain arises as both consumers and corporations increasingly gravitate toward stable, USD-pegged digital currencies that promise less volatility than traditional crypto assets.
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Standard Chartered’s Alarm: Emerging-Market Banks at Risk
In a recent research report, Standard Chartered identified 48 countries on a spectrum ranging from opportunity to vulnerability. Notably, Egypt, Pakistan, Bangladesh, and Sri Lanka have been singled out as particularly exposed to potential deposit outflows.
“As stablecoins grow, we think there will be several unexpected outcomes, the first of which is the potential for deposits to leave EM banks,” remarked Geoff Kendrick, Global Head of Digital Assets Research at Standard Chartered.
This phenomenon isn’t limited to high-risk economies alone, as even smaller outflows—roughly 2% of total deposits—could severely destabilize countries struggling with weak currencies and fiscal deficits. Madhur Jha, the Head of Thematic Research, pointed out a crucial trend: as banking functions migrate to non-bank digital platforms, the traditional banking ecosystem faces significant shifts.
South Africa Confirms Growing Risk
In tune with these warnings, South Africa’s Reserve Bank (SARB) has taken a closer look at the financial stability risks posed by stablecoins and other crypto assets. According to their 2025 Financial Stability Review, stablecoin adoption in South Africa has risen dramatically, with trading volumes soaring from 4 billion rand in 2022 to nearly 80 billion rand (approximately $4.6 billion) by late 2025.
Central bank officials have raised alarms about the fully digital and borderless nature of cryptocurrencies, suggesting that this allows them to sidestep exchange control regulations. Herco Steyn, SARB’s lead macroprudential specialist, has stressed the need for timely regulations, emphasizing that the current lack of comprehensive oversight hinders the ability to manage these rapidly evolving markets effectively.
Regulatory Gaps and Market Implications
South Africa is proactively crafting new regulations aimed at bringing cross-border crypto transactions under closer scrutiny. However, the situation remains precarious, as major platforms like Luno, VALR, and Ovex now cater to 7.8 million users and manage assets totaling around $1.5 billion.
The increasing preference for USD-pegged stablecoins reflects a market desire for lower volatility compared to assets like Bitcoin or Ether. This trend is particularly alarming for emerging markets, where the potential capital flight could severely impact economic stability.
The risks are pronounced in economies characterized by twin deficits—countries like Türkiye, India, Brazil, South Africa, and Kenya seem especially susceptible to outflows propelled by stablecoin adoption. This paints a complex picture for policymakers who now face the challenging task of balancing innovation in digital finance with the need to maintain systemic stability.
As countries pursue frameworks that can prevent potential crises while still supporting the growth of digital finance, the stakes have never been higher. The interaction between traditional banking and the burgeoning world of stablecoins may determine the financial landscape in the years to come.