Trump administration weighs using stablecoins to strengthen dollar dominance

The Trump administration is considering joint ventures with private companies to promote dollar-backed stablecoins overseas. Bloomberg reported that the plan aims to strengthen the dollar's global dominance. The plan also aims to create demand for U.S. Treasury notes. The Treasury Department could help promote U.S. dollar stablecoins globally. The State Department could also help promote them. The U.S. International Development Finance Corporation could take part in the effort. The International Monetary Fund warned that wider stablecoin adoption could accelerate capital flight in emerging economies. The IMF also warned that adoption could weaken domestic currencies. The IMF further warned that adoption could limit policymakers' control over financial flows. Stablecoins are blockchain-based digital tokens whose values are pegged to external references such as the U.S. dollar. Stablecoins are widely used to fund crypto trading and cross-border payments. USDT and USDC are the world's two largest stablecoins. Both are pegged 1:1 to the U.S. dollar. Together, they account for almost 90% of the stablecoin market's total value. The total stablecoin market value is $292.49 billion.