A new survey of central banks suggests growing skepticism about the future of the US dollar and its role in the global economy.

Analysts from the Official Monetary and Financial Institutions Forum (OMFIF) – an independent think tank organization concerned with central banking, economic policy and public investment – say there is a global shift away from the dollar and into other currencies, primarily the euro and the renminbi.

In the 2025 edition of its Global Public Investor report, which surveys 75 central banks around the world, OMFIF says there are clearly “growing questions over the dollar’s dominance in portfolios and public investors are seeking safe-haven assets.”

The survey notes that lately, euros have outshined dollars and among emerging markets, the renminbi has surfaced as a new favorite.

“The dollar is the only currency where net demand has fallen among central banks this year. This is
attributable to rising concerns about the US political environment, highlighted by 70% of respondents,
up from 31% last year, as well as geopolitics and US fiscal risks. The caution extends to global public funds – more than half think that US market exceptionalism will end.”

However, OMFIF notes that the dollar’s reserve currency status is not yet under threat, given that 80% of central banks surveyed said that the dollar still provides safety and liquidity, and that the “vast majority” expect the greenback to constitute over 50% of global reserves over the next decade.

Rather than a rapid “de-dollarization,” central banks are anticipating a “gradual currency diversification,” according to the report.

As to what’s driving the move away from the dollar, according to the survey, the US political environment under the Trump administration is “directly leading to doubts about the dollar.”

“This factor was selected by 70% of respondents as a discouraging factor for investing in dollar assets, more than double from a year ago. Linked to the recent political shift is the move towards trade protection and broader geopolitical uncertainty – which 60% flagged as an issue, up from 32% last year. Concerns about the fiscal outlook have also increased, with one central bank in Europe mentioning, ‘we are mindful of potential risks stemming from US fiscal imbalances’.”

Read the full report here.

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Traditional currencies have dominated the financial landscape for a long time. However, in recent years, a new type of digital currency has emerged, called stablecoins. Although Stablecoins are a novel concept, they hold immense promise in today’s financial landscape. In fact, Sablecoins today serve as a bridge between traditional currencies and cryptocurrencies. In the evolving financial landscape, it is essential to understand what Stablecoins are. Additionally, you should be able to answer the question, “How are stablecoins different from traditional assets?’ Let’s take a look at the current financial landscape by exploring Stablecoins vs traditional currencies.

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What are Stablecoins?

Stablecoins are certainly among the most popular crypto assets today. These cryptocurrencies are programmable virtual currencies generally pegged 1:1 to fiat currencies like the USD. Unlike other digital currencies, which can be highly volatile, stablecoins remain stable. Their consistent value makes them highly attractive today. Some unique features of stablecoins you should know include:

• Stablecoins are digital currencies, and they are tied to fiat currencies, ensuring their value remains stable or consistent. 
• Since blockchain technology powers these currencies, they act as a highly secure, efficient, and flexible medium of exchange.
• Users can engage in faster and highly efficient transactions by using Stablecoins since they have a virtual existence. 

What are Traditional Currencies?

Traditional currencies are also known as fiat currencies. These currencies are issued by national governments and derive their value from public trust in the issuing authority. For centuries, traditional currencies have played a crucial role in the financial system. People use these currencies as the primary medium of exchange. Each country has its own currency for financial transactions. Key features of traditional currencies include:

• Traditional currencies are highly centralized in nature, and they are regulated by the respective issuing regions. 
• These currencies act as the main tools used by central banks to influence interest rates and inflation.
• During financial instability, traditional currencies help stabilize nations’ economies. 

Want to learn the basic and advanced concepts of Stablecoin? Enroll now in the Stablecoin Fundamentals Masterclass

Major Differences Between Stablecoins and Traditional Currencies

Both stablecoins and traditional currencies act as currencies. However, they are very different from one another. As you already have an insight into Stablecoins and Traditional Currencies, it is time to look at their differences. By understanding how they vary from each other, you can gain insight into the future of the financial realm. The main differences between these currencies are presented below:

When discussing traditional currencies vs stablecoins one of the main differences is undoubtedly related to technology. The role of technology, especially blockchain technology, is fundamental in the case of stablecoins. Blockchain technology ensures flexibility, security, and transparency in stablecoins. Thus, you could certainly say that technology acts as the backbone of these digital currencies.

When it comes to traditional currencies, the role of technology is limited. On the contrary, banking systems play a pivotal role in supporting these traditional assets. In the absence of banks, traditional currencies cannot exist. However, you cannot ignore the role of technology in the context of traditional currencies. This is evident in the rising popularity of cashless transactions and online payments. 

• Role of a central authority

Stablecoins may be centralized or decentralized. Some of the common examples of centralized stablecoins are USDA and TrueUSD. In addition to centralized stablecoins, there exist several examples of decentralized stablecoins, such as DAI and FRAX. Therefore, while some stablecoins may operate in centralized ecosystems, others may operate in decentralized ecosystems. 

In the case of traditional currencies, the role of the central authority is fundamental. Since they serve as centralized tools, you cannot negate the vital role the central authority plays in regulating these assets. Typically, the central bank of a nation plays the role of the central authority.

Even though the acceptance of stablecoins is gradually increasing, it is a fairly new type of currency. Therefore, its presence is certainly limited. In fact, people with limited insight into the crypto space may not be properly aware of stablecoins. But this is not the case with traditional coins. 

So, a major difference between Stablecoins and Traditional Currencies revolves around the usability factor. Traditional currencies are universally accepted. Since an issuing authority is involved, it has a positive impact on its usability.

A major point of difference between stablecoins and traditional currencies exists because of the varying transaction speeds. Since stablecoins are digital currencies, their transaction speed is undeniably high. By using these currencies, you can engage in efficient transactions. 

On the other hand, the transaction speed of traditional assets is lower. Moreover, if you wish to make cross-border payments, stablecoins are surely superior to traditional currencies. If you use traditional currencies, you might have to wait for a few days to settle a global payment. However, by using stablecoins, you can settle such transactions within a few minutes. 

While using stablecoins, users may have a number of security concerns. Some of the main security concerns one cannot ignore involve smart contract vulnerabilities and risks relating to regulations. Users need to take these aspects into consideration when using stablecoins as a medium of exchange.  Traditional currencies are secure currencies when users conduct monetary transactions via banks. Since they are centralized and backed by a recognized authority, the questions regarding security aspects are limited.  

The table presented below gives an overview of the main differences between stablecoins and traditional currencies.

In the current financial environment, both stablecoins and traditional currencies are playing an important role. Even though traditional currencies have been playing a catalytic role in the financial landscape, the emergence of stablecoins may bring an end to their dominance. In unpredictable times stablecoins may act as the perfect currency which can help overcome the imitation of conventional currencies. 

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Future of Stablecoins:

The future of stablecoins is extremely prosperous and bright. Although these digital assets are in their nascent stage, they have gained massive recognition. They combine the stability of traditional currencies and the novelty of cryptocurrencies. In the highly volatile setting, stablecoins seem like the ideal tool capable of revolutionizing the financial world. Stablecoins may be the future of the modern financial environment for the following reasons: 

• Increase in financial inclusion

One of the main reasons for the bright future of stablecoins revolves around financial inclusion. These novel currencies support financial inclusion. People can access these currencies if they have an internet connection. Even if there are a limited number of banks and financial institutions, their ability to use stablecoins will not be affected. 

A major strength of stablecoins certainly lies in the liquidity feature. These innovative currencies enhance liquidity along with the financial efficiency of transactions. As a result, business entities do not have to maintain a significant amount of cash reserves. Instead, they have the option to utilize stable coins to engage in a diverse range of financial transactions. 

A major concern one may encounter while engaging in financial transactions centres around transparency. However, by using stablecoins you do not have to worry about transparency. Since these currencies are powered by blockchain technology, the level of transparency is high. The presence of an immutable ledger which is visible to one and all can ensure that high trust exists among the involved parties. 

Stablecoins are a perfect option if you wish to engage in fast and efficient payments. Moreover, if you want to make payments at the global level, they are a much cheaper option than conventional payment methods. Therefore, in globalized times, stablecoins are surely a top choice for individuals and organizations to make cross-border payments.

Excited to learn the basics of cryptocurrency and the ways in which blockchain technology empowers cryptocurrencies, Enroll now in the Cryptocurrency Fundamentals Course

Conclusion

Today, both traditional currencies and stablecoins are playing a proactive role in the financial landscape. The emergence of stablecoins is a revolutionary milestone in the finance realm. Many consider these digital currencies to be the ultimate tools that can transform the face of financial transactions. 

The in-depth Stablecoins vs traditional currencies differences focus on diverse areas such as the role of technology, the involvement of central authority, usability aspect, transaction speed, and security. On the basis of the comparison, the future of stablecoins seems to be full of new possibilities and potential. These digital currencies have the potential to act as major transformative forces that can redefine the existing financial setting. 

*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

We’re committed to providing traders with greater flexibility and control, and are excited to announce a significant expansion in our margin collateral opportunities for Kraken Pro traders. 

With this update, the number of collateral currencies you can use for margin trading increased to 44, plus substantial collateral haircut reductions on 23 other margin collateral assets.

What is a Collateral Currency?

A collateral currency can be fiat, crypto or stablecoin you can use for trading on margin. Unlike standard spot trading, margin trading allows you to open long or short positions by borrowing funds directly from Kraken.

When you trade on margin, Kraken’s margin pool is used for the purchase or sale of the cryptocurrency, while your collateral secures the extensions of margin. The collateral currency you use does not need to match the trading pair of the order book you’re trading on, allowing for greater flexibility to go long or short in any margin enabled trading pair.

Note: Both unstaked and Kraken Rewards assets can be used as margin collateral. However, assets held in Kraken Pro on-chain staking are ineligible to use as margin collateral.

Maximizing the Benefits of Margin Trading

Expanding the range of collateral currencies may empowers traders in several ways:

Tax Advantages: In some jurisdictions, using digital assets as collateral rather than selling them outright can defer taxable events. By leveraging collateral currencies for margin trading, traders can potentially reduce immediate tax liabilities while maintaining exposure to their holdings.

Diversification of Collateral: By using multiple collateral currencies, you can better manage risk and reduce exposure to volatility in any single asset. This is particularly valuable for traders seeking to safeguard their positions in unpredictable markets.

Improved Liquidity: With more assets eligible as collateral, you can free up funds for other trading opportunities while maintaining robust positions on margin. This ensures your portfolio remains active and responsive to market changes.

Strategic Flexibility: The ability to combine assets with different haircuts enables fine-tuned margin strategies tailored to your risk tolerance and market outlook. Whether you prefer conservative or aggressive trading, expanded collateral options provide the adaptability you need.

Hedging and Short Selling Opportunities: With access to margin trading and a diverse range of collateral currencies, traders can hedge their existing positions or take advantage of downward market movements through short selling. This opens up opportunities for profit regardless of market direction.

Leverage and Capital Efficiency: Margin trading can amplify your buying power, allowing you to take larger positions than your available capital. This capital efficiency is further enhanced by the ability to use a broader range of collateral currencies, enabling you to maximize potential returns while optimizing resource allocation.

New Collateral Currency Choices 

Here’s the list of the 9 new assets being added to Kraken’s margin collateral lineup, bringing the total to 44 options.

Asset	Haircut
Arbitrum (ARB)	10%
Filecoin (FIL)	20%
The Graph (GRT)	20%
Injective (INJ)	20%
Kaspa (KAS)	20%
Kusama (KSM)	20%
Mina (MINA)	20%
Sei (SEI)	10%
Celestia (TIA)	10%

Collateral Currency Haircut Changes

The following 23 assets have had margin collateral haircut improvements: 

Asset	Old Haircut	New Haircut
LTC	30%	7.5%
AVAX	30%	10%
LINK	30%	10%
TRX	30%	10%
ATOM	30%	10%
DOGE	20%	7.5%
RENDER	30%	20%
NEAR	30%	20%
STX	30%	20%
SHIB	30%	20%
RUNE	30%	20%
PEPE	30%	20%
WIF	30%	20%
MANA	30%	20%
TAO	30%	20%
XTZ	30%	20%
SUI	30%	20%
USDT	10%	0.5%
XRP	10%	5.0%
SOL	10%	7.5%
DOT	10%	7.5%
ADA	10%	7.5%
PAXG	5%	3%

The following assets have had collateral haircut extensions: 

Asset	Old Haircut	New Haircut
BTC	0%	1%
ETH	0%	1%
USDC	0%	0.5%

In addition to the above JPY and MATIC have been discontinued as margin collateral assets.

Understanding Haircuts

When using a currency as collateral, Kraken applies a “haircut” to determine its effective value. This haircut reflects the percentage reduction applied to the asset’s value to account for potential price volatility. For instance, if you hold $1,000 worth of an asset with a 20% haircut, its collateral value is calculated at $800. This approach ensures greater stability and reduces the risk associated with using volatile assets as margin collateral.

What to Keep in Mind

It’s important to note that collateral assets used to open margin positions cannot be exchanged for other currencies or withdrawn while the position is open. These assets remain reserved as collateral and are visible in your account balance, but they are restricted from trading or withdrawals. You can check the availability of your collateral assets at any time through the Funding tab in your Kraken account.

Ready to trade but don’t have a Kraken account yet? Sign up today! 

Availability of margin trading services is subject to certain limitations and eligibility criteria. Trading using margin involves an element of risk and may not be suitable for everyone. Read Kraken’s Margin Disclosure Statement to learn more.

Trade with caution. There is no guarantee that a limit order will execute. There is no guarantee of margin pool availability at all times. There is also no guarantee of a market order executing at a certain price. The availability and liquidity of the particular digital asset will impact these types of orders.

These materials are for general information purposes only and are not investment advice or a recommendation or solicitation to buy, sell, stake or hold any cryptoasset or to engage in any specific trading strategy. Kraken does not and will not work to increase or decrease the price of any particular cryptoasset it makes available. Some crypto products and markets are regulated and others are unregulated; regardless, Kraken may or may not be required to be registered or otherwise authorised to provide specific products and services in each market, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the cryptoasset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your cryptoassets and you should seek independent advice on your taxation position. Geographic restrictions may apply. See Legal Disclosures for each jurisdiction here.