The world’s central banks long ago stopped discussing whether stablecoins are risky. Their main concern now is who will control them and how.
On April 20, BIS General Manager Pablo Hernández de Cos called for global cooperation on stablecoins, calling them “very important.”
bank The International Settlement Organization, often referred to as the central bank of central bankers, has raised concerns about stablecoins before, but the language they used was: It’s much sharper now. Dekos warned of market runs that could cause market stress, dollar-pegged tokens that accelerate dollarization in developing countries, and a fragmented regulatory framework that allows private companies to arbitrage across borders.
This is the terminology of systemic risk, which is different from the investor protection framework that previously dominated the discussion.
Stablecoins are cryptocurrencies designed to maintain a stable value compared to fiat currencies. Tether’s USDT and Circle’s USDC are the two largest, together accounting for about 85% of the $315 billion in stablecoins currently in circulation.
Unlike savings accounts or fiat currencies, stablecoins function as private IOUs worth $1, are backed by reserves including U.S. Treasury bills, and are built for speed across borders and crypto markets. At that scale, its convenience is exactly what central banks are currently worrying about.
Central banks are concerned about deposits, not pegs.
Concerns about peg stability are real. If issuers are unable to maintain the value of a dollar during mass redemptions, the result will be a rapid liquidation of reserve assets, leading to volatility in the Treasury market.
But a deeper concern is how stablecoins will impact the banking system as they grow. When people hold tokens instead of bank deposits, banks lose their capital base to use for lending. When payments are settled on private token networks rather than bank rails, banks lose fee income, transaction data, and customer relationships.
The ECB has been clear about this chain, and stablecoins could simultaneously harm all three European banks while giving dollar-denominated tokens a foothold in a market that is said to be dominated by the euro.
crypto slate We reported on the ECB’s modeling in November 2025, when policymakers wargamed what a $2 trillion stablecoin would mean for European financial stability. Their conclusion was that at that scale, stablecoins would become a direct channel for transmitting U.S. financial stress to European banks.
Citi’s April 2026 study predicts that stablecoin issuance could reach $1.9 trillion by 2030 in a base case and $4 trillion in a higher adoption scenario. These numbers are now actively shaping how central banks set planning horizons.
Deposit issues have become an urgent issue for banks. If stablecoins can offer competitive yields, there is a clear incentive for consumers to move their balances from insured bank accounts to digital dollar wallets, and the US banking lobby estimates that stablecoins could unlock around $500 billion in deposit withdrawals by 2028.
The Fed added further complications in its March 2026 memorandum on payments stablecoins and cross-border payments. A large enough stablecoin sector outside the banking system could slow down the way monetary policy reaches the real economy. The Fed’s tools work through banks, and their reach is weakened by parallel networks that bypass banks.
Because the dollarization problem is global, deposit outflows are occurring primarily in developed countries. Dekos warned that stablecoins could accelerate developing countries’ structural dependence on the dollar while making it easier to circumvent capital controls, increasing inflows in periods of stability and accelerating capital flight in times of stress.
We have seen this happening in countries such as Nigeria, Argentina, and Türkiye. There, households are already using stablecoins pegged to the dollar to protect their savings from local currency devaluation, bypassing official exchange rates and national banking systems altogether.
Standard Chartered estimates that banks in emerging markets could lose up to $1 trillion in deposits to stablecoins. The IMF describes stablecoins as the digital edge of the dollar system, a term that perfectly captures both the utility and the structural threat.
This means that stablecoins can extend dollar power more quickly and directly than the previous Eurodollar system, through private companies rather than state institutions, and central banks with smaller economies have no practical mechanisms to slow capital outflows.
The real battle is over who controls the movement of stablecoins.
This debate has reached European political leaders, but there is no consensus.
On April 17, French Finance Minister Laurent Lescure said the current amount of euro-pegged stablecoins is “not satisfactory” and supported Kyvaris, a consortium of European banks including ING, UniCredit, and BNP Paribas, to build a euro-denominated stablecoin. Lescuir also urged European banks to consider tokenized deposits, framed as a defense of European payments sovereignty against US domination.
It’s hard to miss the tension in that position. European policymakers fear stablecoins and fear being excluded from the infrastructure race. If dollar tokens become the default payment layer for digital payments around the world, Europe, which has blocked the development of stablecoins domestically, will be on the American rails regardless.
At the same time, Denis Baux, First Deputy Governor of the Banque de France, is calling for stronger MiCA regulation of non-euro stablecoins used for everyday payments, despite Lescure’s support for the technology.
Europe is implementing two policy tracks simultaneously without resolving the contradictions. Policymakers want the efficiency of moving tokenized money, but are deeply uncomfortable with private issuers controlling it.
Whether regulators end up treating stablecoins as payment utilities, deposit substitutes, or shadow financial market products will determine how much of the financial system private issuers can absorb.
This reclassification is happening in real time, and the results will shape how money moves for the next decade.
