ECB and BIS Warn Stablecoins Challenge Monetary Control and Banking Stability

Central bankers and international monetary researchers are warning that the rapid rise of stablecoins poses clear risks to bank stability and monetary sovereignty, drawing parallels to money market funds and currency dollarisation ¹².

Speaking at the Bank of Korea International Conference on Central Banks and the Future of Money on June 1, 2026, European Central Bank Executive Board member Isabel Schnabel warned that stablecoins replicate vulnerabilities seen in money market funds ¹. Schnabel noted that global stablecoin market capitalisation is nearing $300 billion, with dollar-pegged assets Tether ($USDT) and USD Coin ($USDC) accounting for roughly 90% of the aggregate market ¹. Euro-denominated tokens represent only approximately €500 million ¹. Schnabel stated that about 85% of crypto trading platform volume involves swaps between stablecoins and other digital assets ¹.

According to Schnabel, stablecoins threaten to spur bank disintermediation by pulling retail deposits away from traditional lenders, leaving banks reliant on more volatile and rate-sensitive wholesale funding ¹. Because issuers back tokens with short-term assets and promise redemption at par outside the conventional banking perimeter, sudden liquidation demands could trigger investor runs and fire sales ¹.

Emerging Market Dollarisation Risks

A research paper released by the Bank for International Settlements examined foreign currency deposits and stablecoin inflows across more than 130 economies ². The authors found that stablecoin inflows to emerging market and developing economies share the same macro-financial drivers as traditional deposit dollarisation, notably exchange rate pass-through and banking or sovereign crises ².

Critically, the BIS researchers documented that stablecoin flows remain largely unaffected by foreign exchange or capital flow restrictions, unlike traditional banking deposits ². The paper noted that this persistence occurs partly because stablecoins circulate outside the standard regulatory perimeter, potentially amplifying domestic inflation risks while complicating sovereign capital management ². At the time of writing, $BTC traded at $83,707, while $USDT stood at $0.9997.