Stablecoins Fall Short as Money
In its 2026 Annual Economic Report, the Bank for International Settlements (BIS) concluded that current stablecoins do not meet the criteria of money across dimensions of singleness, resilience, interoperability, and finality. The report describes stablecoins as functioning more like exchange-traded fund (ETF) shares than true payment instruments. Frequent de-pegging events in secondary markets and redemption frictions prevent stablecoins from serving as reliable unit of account, medium of exchange, or store of value.
Market Scale and Macroeconomic Impact
The BIS estimates the global stablecoin market capitalization at approximately $320 billion, with over 99% pegged to fiat currencies (predominantly the U.S. dollar). Tether (USDT) and USD Coin (USDC) dominate the landscape. Using economic modeling, the BIS projects that even if stablecoin issuance expands to $1–3 trillion, the net impact on economic output would be slightly negative. The primary channel is increased funding costs for banks and reduced credit supply, as stablecoin issuance drains deposits from traditional banking systems.
Emerging Market Risks: 'Stablecoin Dollarization'
The report specifically warns that emerging markets face heightened risk of 'stablecoin dollarization,' where residents increasingly adopt dollar-pegged stablecoins as a store of value in place of local currencies. This trend could alter cross-border capital flows, undermine monetary sovereignty, and hamper the ability of central banks to conduct independent monetary policy, potentially increasing financial fragility.
Preferred Path: Unified Ledger Integration
To address the systemic challenges posed by stablecoins, the BIS reiterates its recommendation for a 'unified ledger' architecture. This approach would integrate tokenized central bank reserves, commercial bank money, and regulated private monies on a shared platform, anchored by central bank liabilities. The goal is to preserve the efficiency gains of digital currencies while maintaining financial stability and monetary sovereignty.