Stablecoin demand transmits to FX markets – BIS paper
Inflows into digital assets make acquiring dollars via swap markets more expensive, authors find
The transmission of increased demand for stablecoins to foreign exchange markets is depreciating local currencies and widening the covered interest parity deviation between spot and forward markets, a study from the Bank for International Settlements has found.
The working paper, published on March 27, provides a systematic assessment of the connection between stablecoins and the traditional FX market. The authors – Iñaki Aldasoro, Paula Beltrán and Federico Grinberg – use data on four major
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