An on-chain Forex market could solve the issues met by non-USD stablecoins...
Ramp to foreign liquidity
Forex is the largest traditional financial market with a daily volume of $6.6 trillion. It is mainly used for non-speculative use cases, like buying or selling currencies for investing in foreign securities. For example, a Japanese bank would need to exchange JPY for USD for investing in AAPL.
In this case, Forex is used as a ramp to access foreign liquidity.
Ramp to deepest liquidity
In order-book-based crypto exchanges, the most liquid markets are quoted against USD. For example, on Kraken, buying 1 BTC with EUR or AUD costs more than buying it with USD. Someone with AUD would better exchange them for USD and then buy BTC.
In AMMs-type exchanges, USD-stablecoins are the most liquid and spread stablecoin. Rather than competing with USD-stablecoins for liquidity, it is more efficient to build an on-chain Forex market allowing users to swap their non-USD stablecoins for USD one to leverage the latter's liquidity.
In this case, Forex can be used as a ramp to access the most liquid markets.
An on-chain Forex market
Building an on-chain Forex market is possible using AMMs, but despite the recent innovations like concentrated liquidity or cross-asset swap, it remains very capital-inefficient to build liquidity on AMMs, especially for crypto-collateralized stablecoins. Eventually, Forex pools on an AMM can only work if arbitrages can be performed on a primary market where trade can happen at the real market price.
The Synthereum protocol enables a capital-efficient on-chain Forex which guarantees the exchange of jFIATs at the real market price, without price impact, granting them access to the USDC liquidity.