A New Form Of Dollarization?

Stablecoins in Türkiye As A Means Of Currency Substitution

Defined as holding foreign currency-denominated assets and liabilities to hedge against the risk of local currency depreciation in inflationary economies, dollarization has traditionally been a key concern for central banks, closely monitored and addressed through policy measures, particularly in its classical forms such as deposit and credit dollarization. In Türkiye, the trend of dollarization has been a persistent issue for years. With the diversification of financial instruments, this phenomenon now manifests in various forms, such as investment funds. Studies indicate that stablecoins have emerged as a highly popular new form of dollarization in Türkiye. The economic developments in March are expected to further amplify this trend to unprecedented levels.