Opinion: Dollar Stablecoins Could Further Strengthen Dollar Dominance and Heighten Financial Vulnerabilities

August 28 news, at the 2026 Jackson Hole Global Central Bank Symposium, Cornell University professor Eswar Prasad presented a paper co-authored with Gordon Liao and Tony Zhang, titled "Financial Innovation and the International Monetary System." The paper notes that although the dollar's share of global foreign exchange reserves has fallen from 72% in 2000 to 57% in the first quarter of 2026, its relative dominance in cross-border payments, foreign exchange transactions, and international bond financing remains solid. Models show that settlement innovations represented by dollar stablecoins are unlikely to weaken the dollar's status, but may instead attract more emerging market firms to dollar debt markets by lowering the cost of accessing dollar-denominated settlement assets; in its baseline calibration, the share of emerging market firms using dollar financing rises from 36% without stablecoins to 88%, a figure presented as an illustrative model result.