These effects are likely to be more significant for small, open economies or those with weak monetary institutions, where the migration away from the sovereign currency to a global stablecoin could weaken the scope for independent monetary policy through a process that is the digital analogue of dollarization.15 Large-scale stablecoin use could also affect larger, advanced economies with extensive connections to the global financial system, including by increasing market volatility and by transmitting shocks across borders.
Finally, there are likely to be financial stability risks for a stablecoin network with global reach. If not managed effectively, liquidity, credit, market, or operational risks—alone or in  14  See, e.g., https://www.jpmorgan.com/global/news/digital-coin-payments and https://newsroom.wf.com/pressrelease/innovation-and-technology/wells-fargo-pilot-internal-settlement-service-using. 15 See, e.g., Christine Lagarde, “Central Banking and Fintech—A Brave New World?” (speech delivered at the Bank of England conference, London, September 29, 2017), https://www.imf.org/en/News/Articles/2017/09/28/sp092917central-banking-and-fintech-a-brave-new-world.