BIS Report Challenges Stablecoin Suitability as Money
A new report from the Bank for International Settlements (BIS) questions the suitability of stablecoins as a form of money within the modern financial system.
According to the BIS Annual Economic Report 2025, stablecoins fail three fundamental criteria critical for effective monetary instruments: singleness
, elasticity
, and integrity
. The report describes stablecoins as digital bearer instruments
that resemble financial assets more than traditional money.
Specific Shortcomings
Lack of Singleness: Unlike central bank money backed at par and universally accepted without checks, stablecoins are issued by private entities and often subject to fluctuating exchange rates, undermining monetary singleness.
Poor Elasticity: Stablecoins require full upfront payment for issuance, creating a rigid supply mechanism. This contrasts with the flexible liquidity provided by central banks during shocks and large-value payments.
Integrity Concerns: Particularly those operating on decentralized networks via unhosted wallets, stablecoins face significant risks related to financial crime, including money laundering, sanctions evasion, and terrorism financing.
Limited Monet Policy Edge
Despite acknowledging the genuine demand for stablecoins due to features like borderless accessibility and potentially lower transaction costs, the BIS insists that any monetary role should be strictly limited and subject to robust regulation.
“Society can re-learn the historical lessons about the limitations of unsound money,” reading the report, underscoring the need for public authorities to guide the financial system.
The Broader Context
The BIS also highlighted that, broadly, while cryptocurrency poses challenges, tokenization itself represents a “transformative innovation” for the next-generation financial system – an evolution rather than wholesale replacement.
Market Reactions
Following the BIS report, the stock price of Circle, parent company of USDC, dropped over 15% on Tuesday, though it recently hit an all-time high.
Alternative Perspectives
The report’s criticism of stablecoins was anticipated by some in the DeFi community following consideration of the BIS’s own dual ownership (representing central banks) and its history.
Jim Walker, chief economist at Aletheia Capital, added:
“The BIS is hysterical in its opposition to crypto… The first criterion [central bank backing] itself should be a straw man given history.”
