Core View: Stablecoin 'Money' Properties in Question
The Bank for International Settlements (BIS), in its newly released annual report, delivers a sharp critique of stablecoins' fundamental nature. It argues that stablecoins function more like exchange-traded funds (ETFs) than genuine currencies. Three main reasons are cited: first, market prices of stablecoins often deviate from their pegged face value (e.g., $1), with spreads widening during market volatility; second, the redemption process involves friction and is not instantaneous at par; third, stablecoins lack direct support from central bank money, as they are not settled on central bank balance sheets like bank deposits.
Dollar-Pegged Stablecoins Accelerate Dollarization in Fragile Economies
The BIS report specifically warns that dollar-pegged stablecoins are being widely used in economically fragile regions with unstable monetary systems. In these areas, users turn to stablecoins to replace local currencies for transactions and store of value, effectively accelerating de facto dollarization. This not only weakens the status of local currencies but also renders traditional capital controls (e.g., foreign exchange limits, fund flow monitoring) largely ineffective. The BIS believes this trend could further exacerbate financial instability and pose additional challenges for monetary policy formulation.
Cross-Issuer and Cross-Chain Redemption Risks
The report further points out a core defect in the current stablecoin ecosystem: the inability to guarantee that exchange at face value can be maintained across different issuers and across different blockchain networks. Even if a stablecoin can be redeemed 1:1 with its issuer, cross-chain transfers or cross-issuer exchanges often incur additional fees and slippage, resulting in net amounts below par. This contrasts sharply with the frictionless deposit and withdrawal of fiat money within the banking system. The BIS concludes that stablecoins have not yet acquired the core attributes of 'money' (unit of account, medium of exchange, store of value) and remain far from becoming true currencies.