On a recent post, 
My preference for moving money around is USDC on Stellar and Solana whenever HBD is not an option, which is often, frankly. All three are fast. Stellar and Solana don't have free transactions. But they are nearly free.
Here are my half-baked ideas. I think stablecoins are a better form of money for dollarizing an economy in that it does not take much effort for them to infuse into that economy, unlike fiat currency, which relies largely on import/export imbalances to work their way through the banking system. My assumption is that it is easier for individuals to acquire dollar stablecoins than fiat in most countries.
What central banks ought to do is offer fiat-stablecoin conversions for institutions. Trying to convert a few million USDC or USDT can be expensive and skew conversion rates due to low liquidity. Central banks routinely manage large volumes of money to where liquidity is not an issue. Perhaps it is inconvenient for them to manage two currencies, their native currency and stablecoins. But at least then they'd have some measure of the flow of stablecoins in their economies. It would be easier for the federal reserve system (the Fed) as the stablecoins and dollar are the same money.
If the Fed accepted stablecoin deposits, meaning retail and commercial banks would accept stablecoin deposits, then it could be more stabilizing for the bond markets. People would have stablecoins locked up in savings or checking accounts, which would mean less volatility for bonds as they'd be locked up to back those stablecoins. Of course, banks could make stablecoins and fiat fungible where a $1 deposit in fiat or stablecoin can be redeemed for either one. But that's something the Fed could mandate or have legislated.
This also introduces a back door for bond shenanigans in that the Fed would no longer have to buy as many bonds from the Government. They could simply increase the stablecoin deposit requirement, which spurs stablecoin providers to buy more bonds.
Ideally, stablecoin providers would diversify where they hold their deposits. In the perfect world, they'd hold deposits at every bank that holds stablecoin. They would not have to match 1:1. It simply de-risk stablecoins from getting depegged from a panic should one bank go under.
In conclusion, the advent of stablecoins presents a unique opportunity to revolutionize not only the way we transact but also how we perceive and manage financial risks. They offer a more transparent, efficient, and inclusive financial system that can potentially disrupt the traditional banking sector. However, like any new technology, they come with their own set of challenges. Central banks and financial institutions must take proactive steps to understand, adapt, and leverage this technology, ensuring that it benefits a wide array of users while mitigating potential risks. Furthermore, stablecoin providers need to ensure diversification in their deposit holdings to prevent a panic-induced depegging scenario. By doing so, we can truly harness the potential of stablecoins to create a more robust and global financial ecosystem.
