Bank for International Settlements (BIS): Stablecoins lack monetary attributes, and warns emerging markets of the risk of "stablecoin dollarization"

The Bank for International Settlements (BIS) released its 2026 annual economic report on Sunday at its annual general meeting in Basel, delivering a systematic critique of stablecoins. The report argues that existing stablecoins have significant flaws across four core monetary attributes: singularity, resilience, interoperability, and integrity. Their prices often deviate from their pegged values, redemption processes are fraught with frictions, and they function more like ETF shares than legitimate payment tools. As of the end of May, the total market capitalization of stablecoins stood at roughly $320 billion, with over 99% pegged to the U.S. dollar, and USDT and USDC collectively holding dominant market share. BIS model calculations show that even if stablecoin market cap expands to $1 trillion to $3 trillion, its net impact on economic output would be negligible, or even slightly negative, as it would drive up bank funding costs and reduce lending capacity. The report also specifically warns against the risk of "stablecoin dollarization": if residents of emerging economies use U.S. dollar-pegged stablecoins as a store of value, it would disrupt domestic capital flows and erode monetary sovereignty. The BIS once again advocates for a tokenized "unified ledger" scheme pegged to central bank money, citing the Agora cross-border payment project—which involves eight central banks and over 40 private sector institutions—as evidence of its feasibility.