Image credit: Bank for International Settlements
The Bank for International Settlements (BIS) has warned that wider use of dollar stablecoins could strain banks, credit markets and monetary policy. BIS General Manager Pablo Hernández de Cos made the warning in a speech at a Bank of Japan seminar in Tokyo on April 20.
The BIS said stablecoins still make up a small part of the financial system, with about $315 billion in market value in early April. But the market remains heavily dollar-based, with about 98% of stablecoins denominated in dollars, and that growth is drawing closer attention from central banks.
The Concern Starts With Bank Deposits
Hernández de Cos said stablecoins could affect credit if households and firms move money out of bank deposits at scale. Banks would then need to rely more on wholesale funding, which can be more expensive and less stable than retail deposits. That could push lending rates higher and reduce the amount of bank credit available.
The BIS said the effect would depend partly on where stablecoin issuers keep their reserves. If issuers hold reserves as bank deposits, total deposits may not fall as sharply. But those balances could still move between banks and prove more volatile than ordinary customer deposits.
Runs Could Spill into Traditional Markets
The BIS also warned that stablecoin runs could spread into traditional finance. If issuers face heavy redemptions, they may need to sell reserve assets or withdraw bank deposits, which could transmit stress to money markets and banks.
The BIS linked that risk to the structure of today’s largest stablecoins. Hernández de Cos said the largest stablecoins issued by Tether and Circle have features that make them look more like securities than money, including redemption limits and price moves in secondary markets.
Policy Risk Is Sharper Outside the U.S.
The BIS warning was not limited to bank balance sheets. Hernández de Cos said dollar stablecoins could deepen dollarization in emerging markets if people start using them not only as stores of value, but also for payments, prices and wages.
That could weaken local monetary control and make capital flows harder to manage. The BIS said stablecoins may also help users bypass capital controls because cross-border transactions often happen outside the direct reach of domestic regulators.
Global Rules Are the Next Policy Test
The speech leaves regulators with a difficult trade-off. Stablecoins can support faster payments and programmable settlement, but the BIS argues that current designs still fall short on redemption certainty, stability and payment reliability.
Hernández de Cos called for international cooperation, warning that fragmented national rules could create regulatory arbitrage. Stablecoins now remain central to the global policy debate as governments decide whether to treat them as payment money, investment products or something in between.
