Back to Markets
Crypto▼ Bearish
BIS Report Warns Stablecoin Dollarization Threatens Emerging Markets
The BIS says stablecoins fail as full currencies and their $320B, 99% dollar-pegged supply risks monetary sovereignty in developing economies. It proposes a unified ledger and the Agora project instead.
Continue with
The Bank for International Settlements, in its 2026 annual economic report released Sunday, said stablecoins do not function as full currencies and could accelerate dollarization in emerging economies, weakening their monetary sovereignty. The report, published during the BIS annual general meeting in Basel, assessed stablecoins against four criteria: uniqueness, elasticity, interoperability, and integrity. It found existing models fall short on all fronts.
Stablecoins can trade at prices that deviate from their peg on secondary markets, the report said. Their redemption mechanisms are more like exchange-traded fund shares than currency, making them clunky for daily use. BIS General Manager Agustín Carstens has previously made similar points about their financial nature.
The total stablecoin market reached roughly $320 billion by the end of May, the BIS said. More than 99% of that supply is pegged to the U.S. dollar, with Tether's USDT and Circle's USDC dominating. The report warned that when households in developing countries adopt dollar-pegged tokens as a store of value, it shifts capital flows and erodes demand for local currency. The BIS called this "dollarization of stablecoins" and said it challenges monetary sovereignty.