Eswar Prasad: US dollar stablecoins may strengthen the dominant position of the US dollar in the global financial system

At the 2026 Jackson Hole Global Central Bank Annual Meeting, Cornell University professor Eswar Prasad presented a paper titled "Financial Innovation and the International Monetary System" co authored with Gordon Liao and Tony Zhang. The paper points out that the proportion of the US dollar in global foreign exchange reserves has decreased from 72% in 2000 to 57% in the first quarter of 2026, but its dominant position in cross-border payments, foreign exchange transactions, and international bond financing remains stable. The model shows that settlement innovations represented by US dollar stablecoins may attract more emerging market companies to the US dollar debt market by reducing costs, and the proportion of emerging market companies using US dollar financing has increased from 36% without stablecoins to 88%.