Experts Dismantle Standard Chartered’s $1 Trillion Stablecoin Warning For Emerging Markets

What Happened

Experts Weigh in on Standard Chartered’s $1 Trillion Stablecoin Warning

The report, led by Geoff Kendrick, Global Head of Digital Assets Research, and Madhur Jha, Head of Thematic Research, flagged Egypt, Pakistan, Bangladesh, and Sri Lanka as the most exposed.

Their findings indicate a growing migration of banking functions to the non-bank digital sector. This finding came as stablecoins increasingly offer consumers access to a USD-based account without traditional intermediaries.

Market Context

Standard Chartered’s recent research warned that stablecoins could drain up to $1 trillion from emerging market (EM) banks over the next three years as savers flock to digital dollar assets.

However, not everyone sees the $1 trillion shift as a one-way outflow. Dominic Schwenter, COO at Lisk, believes Standard Chartered’s warning may overlook a key parallel trend: the rise of local-currency stablecoins across emerging markets.

Elsewhere, Robert Schmitt, co-founder of Cork Protocol, says Standard Chartered’s projection could signal nothing short of a “second Bretton Woods.” This alludes to a moment of structural realignment in organizing and controlling global capital.

“Following Bretton Woods, much of the global trade was settled in dollars. The GENIUS Act and the proliferation of stablecoins in emerging markets act like a second Bretton Woods; instead of just commodities and trade, all commerce and transactions can be seamlessly settled using dollar rails at very low cost.” Schmitt told BeInCrypto.

If Bretton Woods redefined post-war finance by tying the global system to the US dollar, stablecoins could represent a 21st-century reboot. For emerging markets, however, this is driven by code, fintechs, and market demand, rather than central banks.

Notably, stablecoins are both a lifeline and a liability for emerging markets like Nigeria, Egypt, and Argentina, among others.

On the one hand, they offer citizens a shield against inflation and capital controls. On the other hand, they threaten central banks’ control over monetary policy.

Why It Matters

While that figure represents only around 2% of total deposits across the most vulnerable economies, the structural implications could be historic.

“As stablecoins grow, we think there will be several unexpected outcomes, the first of which is the potential for deposits to leave EM banks,” the team told BeInCrypto in an email.

According to the Lisk executive, while stablecoins might reduce reliance on banks, most users still prefer some form of custodial trust.

Details

“While access to digital US dollars remains a key use case, the more meaningful shift now underway is the rapid rise and adoption of local currency stablecoins,” Schwenter told BeInCrypto.

Schwenter cited examples such as the cNGN in Nigeria, IDRX in Indonesia, and India’s upcoming rupee-backed stablecoin.

“Most people remain uncomfortable with full self-custody and prefer to entrust their funds to a reliable third party — whether a bank, neo-bank, fintech, or crypto exchange,” he said.

Therefore, it is uncertain whether behavior will shift enough to produce large-scale disintermediation, as Standard Chartered alludes to.

To him, stablecoins are not replacing banks. Rather, they are forcing evolution. Schwenter described stablecoins as representing the next step in the evolution of money, articulating that they will disrupt legacy institutions that fail to adapt.

Nevertheless, he conceded that there will still be strong demand for banks and fintechs that can offer secure custody and intuitive UX.

Stablecoins As the New Dollar Standard: A Second Bretton Woods?

Schmitt cited stablecoins enabling a much more widespread adoption of dollars in emerging economies. This, he said, is part of their importance in the US strategic agenda.

In Schmitt’s view, stablecoins extend dollar hegemony beyond traditional financial channels, bringing entire economies into the digital dollar system.

Power to the Individual — and Pressure on the State

“Stablecoins are shifting the balance of power in favor of individuals. It’s like the printing press or the internet. These technologies democratized access to information and transformed societies,” Schmitt noted.