BIS Report: Stablecoins Pose Risk to Global Financial System

A separate section focuses on emerging economies. The BIS identified a trend it calls "stablecoin dollarization." Populations in countries with weak currencies move into dollar-pegged digital assets. That shift weakens domestic monetary policy. It drains deposits from local banks and limits credit availability, exposing these economies to volatile capital flows, the BIS said.

The report also criticized the public blockchains that underpin crypto markets. Bitcoin and Ethereum cannot satisfy the requirements of institutional financial infrastructure, the BIS argued. Transaction fees rise and confirmation times lengthen as volume grows. The networks lack defined governance or identifiable entities accountable for compliance and dispute resolution.

The BIS did not call for banning stablecoins. Instead it promoted a "unified ledger" architecture. That system would integrate tokenized central bank currencies and commercial bank deposits on shared programmable infrastructure. The BIS cited Project Agora, a cross-border payment initiative with eight central banks and more than 40 private firms, as evidence the model works.

For crypto market participants, the report signals growing regulatory pressure on stablecoin issuers. The EU's Markets in Crypto-Assets regulation already imposes reserve and redemption requirements. U.S. lawmakers have debated stablecoin legislation without passing a bill. The BIS framework could shape the rules that follow.

Project Agora continues to expand. No timeline for a full unified ledger has been announced. The BIS report gives central banks an intellectual foundation to argue that private stablecoins are inherently inferior to state-backed digital money.