LOOK at the Philippine peso, the Indian rupee and the Indonesian rupiah. All three of these currencies have been declining compared to the US Dollar. In fact, most currencies all over the world have been losing value relative to the dollar.
Some blame the US stock market, while others blame the Iran war. There are also some that claim that these currencies were already weak since the pandemic and that it was only recent events that managed to escalate their problems.
Regardless, no one could deny that many currencies are having problems, and a lot of people would like nothing more than to shift their wealth into US dollars. This process, however, is very different, and in certain countries, runs the risk of government intervention.
Enter US stablecoins. Imagine a digital dollar that has the same value as a real US dollar — no ups and downs. Each one is backed by an actual US dollar kept in reserve, so its value remains constant. All you need to get one is a phone, the appropriate app and you can buy, sell and transact in a digital currency that has the same value as the dollar.
Now, consider a scenario where the global currency crisis continues. A jeepney driver or stall owner hears about stablecoins from friends and family on Facebook, and they want to protect their wealth. So they digitize their savings, and store them into stablecoins. All they need is the right digital infrastructure, and they are all set.
What does this do to the peso and the conventional banking system?
Many financial analysts think it will only worsen the currency crisis. Certainly, US banks are fighting back against stablecoins and I expect our own bankers and government will do the same. But if the peso continues to depreciate against the US dollar and if our economy continues to become more digitized, then we may soon see a world where there will be more US stablecoin users in the Philippines, at the expense of the Philippine peso./PN
