BIS Warns Stablecoins Risk Dollar Takeover in Poor Countries

Bank for International Settlements General Manager Pablo Hernández de Cos warned that stablecoins could undermine central banks in emerging markets by accelerating dollarization.

Speaking at the Bank of Japan on Monday, the former Bank of Spain governor said stablecoins make it too easy for citizens in developing countries to dodge capital controls and shift wealth into digital dollars. The total stablecoin market has doubled over the past two years to over ₱19.22 trillion ($320 billion), with 99.6% of that value pegged to the US dollar.

Cos said stablecoins could challenge monetary transmission and sovereignty if transactions, prices and wages start getting set in foreign currencies instead of local ones. That risk is highest in countries already facing currency devaluation, where citizens might pay premiums to access dollar-backed tokens. Money is far more than a technology — it's an institutional achievement that depends on trust and international cooperation.

The stablecoin sector attracted over ₱6.01 trillion ($100 billion) from January to October 2025, but growth has slowed sharply this year with less than ₱720.74 billion ($12 billion) in new inflows.

Cos stressed that without international coordination, different national stablecoin rules could fragment markets or create regulatory arbitrage. The US passed the Genius Act in July 2025, becoming the first country to define who can issue stablecoins and how. But Financial Stability Board Chair Andrew Bailey said last week that progress on global stablecoin standards has stalled over the past year.

BIS research argues stablecoins fail basic monetary tests because they trade at different premiums and discounts across platforms, unlike central bank money. The agency also found that stablecoin issuers bought Treasury securities in 2024 at levels comparable to money market funds and large country investors. Cos is rumored for a possible European Central Bank chair role in 2027.