The Bank for International Settlements (BIS) released a report on June 29, declaring that current stablecoins fail to satisfy the four key standards for trustworthy money: uniqueness, flexibility, interoperability, and integrity. The report describes dollar-pegged tokens as resembling asset-specific investment products rather than traditional monetary instruments. BIS emphasizes that stablecoins do not meet the criteria for reliable money and therefore should not be considered a permanent solution for payment and settlement infrastructure.
Four Key Criteria and Stablecoin Shortfalls
Uniqueness requires monetary units to be singular and unforgeable; flexibility demands supply can adjust to demand; interoperability ensures smooth transfer across systems; integrity prevents counterfeiting and fraud. BIS finds stablecoins deficient in all four areas. The report notes that stablecoin prices occasionally detach from pegs, and redemption processes suffer delays and operational issues, threatening payment finality.
Market Size and Simulated Impact
The total stablecoin market is estimated at $316–320 billion, with more than 99% of fiat-backed tokens linked to the U.S. dollar, dominated by USDT and USDC. BIS economists modeled scenarios where the market grows to $1 trillion, $2 trillion, and $3 trillion. In all cases, they calculated a limited but negative impact on economic efficiency: higher bank funding costs and weaker lending capacity offset any potential benefits.
Stablecoin Dollarization Warning for Emerging Markets
For developing economies facing currency instability, BIS issues a more severe warning. The shift by savers toward dollar-pegged digital assets is termed “stablecoin dollarization.” This trend could undermine monetary policy effectiveness, erode domestic bank deposit bases, restrict credit access, weaken local financial institutions, and leave economies more exposed to volatile international capital flows.
Critique of Permissionless Blockchains and the Unified Ledger Alternative
BIS also criticizes public blockchains like Bitcoin and Ethereum, arguing they cannot deliver institutional-grade financial infrastructure. Higher transaction volumes drive up fees and confirmation times, revealing structural limitations. Another concern is the lack of a clear governance framework and a responsible entity for regulatory compliance. Rather than advocating a ban, BIS proposes a unified ledger model that merges tokenized central bank money and commercial bank deposits in a single programmable infrastructure. The report cites Project Agora, a cross-border payment initiative involving eight central bank authorities and over 40 private sector participants, as a practical example.