Now, the international financial organisation known as the “bank for central banks” has waded into the stablecoin debate as the buzzword gathers momentum.
In a “special chapter” released on Tuesday in advance of Sunday’s release of its Annual Economic Report 2025, the Bank for International Settlements (BIS) said stablecoins may play only a “subsidiary” role in the future financial system – as they lack key characteristics held by the currencies on which they are backed.
Stablecoins refer to cryptocurrencies backed by a fiat currency, such as the US dollar and the Hong Kong dollar, or other reserve assets. As suggested by its name, it aims to combine the efficiency of cryptocurrencies with the stability of traditional money.
Instead, the BIS, which is collectively owned by 63 central banks, including those of China and the United States, said a unified platform for a “trilogy” of tokenised central bank reserves, commercial bank deposits and government bonds could “lay the groundwork for the next-generation monetary and financial system”.
Stablecoins rely on the pseudonymity of public blockchains to “circulate without issuer oversight”, and therefore become the “go-to choice for illicit use to bypass integrity safeguards”, the Switzerland-based bank warned in its Tuesday release.
