The Breakdown The Central Banks Strike Back on Stablecoins
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Jun 26, 2025 The Bank for International Settlements has raised serious concerns about the viability of stablecoins for mainstream use. They emphasize a stronger preference for central bank digital currencies. As the U.S. approaches stablecoin legislation, the potential impact on monetary policy is under scrutiny. Additionally, market dynamics are shifting, with Bitcoin gaining traction amid rising geopolitical tensions and evolving investor interests. This discussion reveals the complex future of finance in a world increasingly influenced by cryptocurrencies.
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BIS Critiques Stablecoins as Money
- The Bank for International Settlements (BIS) claims stablecoins fail key qualities for money: singleness, elasticity, and integrity.
- BIS prefers a monetary system centered on central bank digital currencies (CBDCs) to maintain central banks' policy control.
Stablecoins Threaten Monetary Elasticity
- BIS is concerned that full-reserve stablecoins remove central banks' ability to adjust money supply elastically in crises.
- This could lead to a harder dollar system capped by government debt, challenging fiat currency's flexibility.
Stablecoins Could Lower T-Bill Yields
- Stablecoin growth may lower demand for T-bill interest rates, easing government interest costs marginally.
- However, massive stablecoin adoption poses systemic risks that outweigh these benefits, says the BIS.