Stablecoin Initiatives in Latin America Target Inflation and Improve Remittances
Stablecoins are utilized as a protection against the hyperinflation that affects nations like Venezuela and Argentina in the region.
When it comes to stablecoins, the US dollar has always been the gold standard. Such digital assets backed by the US currency provide an easily accessible hedge against inflation in Latin America. Stablecoins that are pegged to local currencies, however, have appeared all across the area and promise to revolutionize international money transfers.
The rise of stablecoins over the last few years has only helped to further cement the dollar’s position as the world’s reserve currency. Due to native currency volatility and a lack of savings and investment options, digital dollars have become more popular in developing markets.
For instance, Tether has developed rapidly in Argentina, despite the country’s over 100% inflation rate. The economic crisis in Argentina is so severe that presidential contender Javier Milei has advocated switching to the US currency.
Many people in Venezuela, a nation where the economy is also afflicted by continuous inflation in recent years, have turned to stablecoins as a means of payment.
Consumers in Latin America may utilize dollar-pegged stablecoins as a protection against inflation, although local currencies are still widely used for day-to-day transactions. The same is true of the continent’s commercial sector.