Central banks have stopped arguing about whether stablecoins are risky. Their focus now is on who will control them and how. On April 20, BIS General Manager Pablo Hernandez de Cos called for global cooperation on stablecoins, describing it as “critically important.” The Bank for International Settlements, the central bankers' central bank, has raised concerns before, but the language is now much sharper. De Cos warned about runs that could trigger market stress, about dollar-pegged tokens accelerating the dollarization of developing economies, and about fragmented regulatory frameworks that private firms can arbitrage across borders. That's the language of systemic risk, distinct from the investor-protection framing that dominated earlier debates.
The Signal
A stablecoin is a cryptocurrency designed to maintain a stable value relative to a fiat currency. Tether's USDT and Circle's USDC are the two largest, together accounting for roughly 85% of the $315 billion in stablecoins currently in circulation. Unlike a savings account or legal tender, a stablecoin functions as a private IOU worth $1, backed by reserves that include US Treasury bills and built for speed across borders and crypto markets. At that scale, the convenience is exactly what central banks now find alarming.
The concern over peg stability is real: if an issuer can't maintain the $1 value during heavy redemptions, the result is a run that forces rapid liquidation of reserve assets, injecting volatility into Treasury markets. The deeper concern, however, is what stablecoins do to the banking system as they grow. When people hold tokens instead of bank deposits, banks lose the funding base they use to make loans. When payments settle on private token networks rather than bank rails, banks lose fee income, transaction data, and customer relationships. The ECB has been explicit about this chain: stablecoins could cost European banks all three simultaneously while giving dollar-denominated tokens a foothold in markets where the euro is supposed to be dominant.
