BIS warns: stablecoins will not replace fiat money
Date: 2025-06-25 Author: Henry Casey Categories: CRYPTO PAYMENTS
BIS Economic Advisor Hyun Sung Shin expressed the opinion that even asset-backed stablecoins — be it currency, bonds or gold — do not perform the functions of real money. He drew a parallel with private banknotes issued by American banks in the 19th century, when control over financial institutions was minimal. Then, as now with stablecoins, there was a risk of loss of trust and sharp fluctuations in value.
Shin emphasized that stablecoin rates can vary significantly depending on the issuer, which deprives them of the status of "reliable money". According to him, without clear regulation, such assets can become a threat to financial stability and monetary sovereignty of states. He recalled the collapse of TerraUSD and the related LUNA token in 2022 as an example of what a lack of control can lead to.
BIS Deputy CEO Andrea Mechler drew attention to the problem of the dominance of one company, Tether, in the stablecoin market. Although USDT occupies more than half of the market, the company itself left Europe, not wanting to comply with the requirements of MiCA, the EU legislation on crypto regulation. Mechler emphasized that the market requires transparency: users must understand what the tokens are backed by and where the reserves are stored.
In response to the risks, BIS proposed that central banks unite and create a digital infrastructure where reserves, bank deposits, and government bonds will exist in the form of tokens. Such a system will simplify and speed up international settlements, as well as reduce transaction costs. According to BIS analysts, the tokenization of financial instruments opens the way to the creation of a global platform in which traditional currencies will retain their leading role.
BIS has previously proposed that countries agree on common standards for regulating stablecoins. The report emphasizes that disparate approaches to regulation hinder the development of these instruments on a global scale and create legal uncertainty.
BIS therefore calls for coordinated actions by regulators to ensure transparency, stability, and trust in the digital asset market.
