The Bank for International Settlements (BIS) has issued a stark warning on the growing influence of stablecoins, highlighting systemic risks to global finance in a special chapter of its annual report. The BIS, often dubbed the “central bank for central banks,” sharply critiques stablecoins, concluding they do not meet the three foundational criteria of future money and may even destabilize the global financial system if left unchecked.
Stablecoins: Gateways or Threats?
According to the BIS, while stablecoins were initially created as on-ramps to the crypto ecosystem, their adoption exposes vulnerabilities rather than delivering genuine innovation. The report concedes that stablecoins offer features like pseudo-anonymity, programmability, and easier access—attributes often celebrated in the crypto sector. Yet, the BIS asserts that these digital assets fall short on three core monetary criteria: universality (widespread acceptance), elasticity (support for real-time gross settlement and credit mechanisms), and integrity (resilience against illicit activity).
“Stablecoins perform poorly against the three tests of serving as the backbone of a monetary system,” the BIS states. The organization stresses that these tokens operate outside the remit of traditional issuers, creating appeal for bad actors and exposing systemic weaknesses. Lacking true settlement functionality and traded at fragmented exchange rates, stablecoins, in the BIS’s view, cannot be considered ‘money of the future’.
Core Flaws: Parity Promise, Profit Pressure, and Risk Transmission
The BIS points to a structural tension: issuers are caught between upholding a 1:1 peg and running a profitable business model—a dynamic that amplifies operational and solvency risks. As stablecoin adoption grows, the BIS highlights a potential tail-risk scenario: forced liquidations of safe assets during a market rout could transmit shocks directly to the broader financial system.
“If stablecoins continue to expand, they may pose risks to financial stability, including ‘tail risk fire sales’ of high-quality assets,” the report warns.
Tokenization as the Next Step in Monetary Evolution
Rather than embracing stablecoins as the future of money, the BIS promotes tokenization of central bank reserves, commercial bank deposits, and government bonds. The report envisions a single programmable platform that integrates these components, facilitating lower-cost, intermediary-free payments with enhanced transparency and efficiency.
Circle shares plunge post-BIS stablecoin warningFollowing the report’s release, shares of Circle—the issuer of the USDC stablecoin—fell more than 15% on the NYSE. Neither Circle nor Tether, the world’s largest stablecoin provider by market cap, have issued public statements in response to the BIS’s conclusions.
This BIS intervention follows ongoing debate among regulators and industry leaders. US Treasury Secretary Scott Bessent, for example, has argued that dollar-pegged stablecoins could strengthen US currency dominance. The BIS, however, makes clear that only robust regulatory frameworks and interoperable, centralized platforms can support future-ready monetary systems.