Large stablecoin redemptions could strain government bond markets because issuers hold those bonds as reserves, the International Monetary Fund (IMF) warned, linking digital money to a potential sovereign financing risk.
Stablecoins can increase demand for the government debt of countries whose currencies the tokens use, the fund said. The risk runs the other way if holders redeem large amounts: trading in the bonds held as backing could come under pressure.
The IMF and World Bank Group held their annual meetings in Bangkok from Oct. 12-18. The IMF set out the redemption risk in its 2026 annual report.
An IMF analysis found that the average yield on 10-year government bonds across the Group of Seven (G7) rose by more than one percentage point from February to September 2026, a change covered in our earlier report on the G7 yield rise. The fund also projects that global public debt will exceed a year’s worldwide economic output by 2030.
Those figures describe different pressures. The yield increase records higher borrowing costs over seven months; the debt projection points to governments’ exposure to those costs. Heavily indebted governments have less room to absorb more expensive financing, while rising yields in major economies can raise borrowing costs elsewhere, the IMF said. The fund compares its projected global debt burden with the period immediately after World War II.
The recorded rise in G7 yields does not, by itself, show pressure from stablecoin redemptions. The IMF describes redemptions as a possible route through which stress could reach government bond markets.
In its October Global Financial Stability Report, the IMF raised another digital-finance concern. Markets for tokenized assets remain small, but their growth could give liquidity strains new paths through the financial system and deepen dependence on technology and market infrastructure.
