$1 Trillion Deposit Flight Looms as Stablecoins Rise, Standard Chartered Cautions
The growing popularity of stablecoins could pull as much as $1 trillion in deposits out of emerging market banks over the next three years, according to a new report by Standard Chartered.
The bank warns that households and businesses in developing economies are increasingly turning to dollar-pegged digital assets as a safer and more liquid alternative to local currencies.
Stablecoins Erode Trust in Local Banking Systems
Analysts Geoff Kendrick and Madhur Jha noted that the trend reflects a broader post-crisis shift of banking functions into the non-bank sector.
As more users adopt stablecoins, traditional banks in countries such as Egypt, Pakistan, Bangladesh, and Sri Lanka face a growing threat of deposit flight — a risk intensified by weak local currencies and high inflation.
Also read: Stablecoins Set the Stage for Meta, Google and Apple’s Finance Revolution: Bitwise CEO
Even without offering yields, now prohibited under the U.S. GENIUS Act, stablecoins continue to attract users prioritizing capital preservation and access to the global financial system. The report warns that this migration could further destabilize emerging market banking sectors, forcing regulators to act swiftly to modernize their financial infrastructure.
A $2 Trillion Market by 2028
Standard Chartered forecasts that the global stablecoin market could reach $2 trillion by 2028, with roughly two-thirds of that demand originating from emerging markets.
Current stablecoin market cap (Source: DefiLlama)
This growth reflects the increasing utility of stablecoins for international payments, remittances, and trade settlement, especially in regions where access to U.S. dollars is limited.
The bank emphasizes that while stablecoins threaten traditional deposits, they also offer a path toward cheaper remittances, faster payments, and financial inclusion — if managed within clear regulatory frameworks.
Also read: Coinbase Revives Stablecoin Bootstrap Fund as USDC Issuer Circle Faces Market Test
The “Stablecoin Summer” Could Freeze Emerging Banks
Many emerging market regulators are already exploring central bank digital currencies (CBDCs) and upgraded payment systems in response to the stablecoin boom. However, Standard Chartered cautions that unless local authorities adapt quickly, the so-called “stablecoin summer” could evolve into a long and difficult winter for emerging market banks struggling to retain deposits and maintain liquidity.
Also read: De-Dollarization Isn’t Just Talk Anymore — The Numbers Are Showing It
Stablecoins, which are digital assets pegged to stable currencies like the U.S. dollar or gold, have become the backbone of crypto trading and cross-border transfers. Their rise is now spilling into the traditional financial system — blurring the lines between banking and blockchain, and challenging regulators worldwide to redefine what modern money looks like.
