The Bank for International Settlements (BIS) has scrutinized the stablecoin market in its Annual Economic Report dated June 28, 2026, stating that digital tokens issued by the private sector fail to meet the basic requirements of reliable money and could fragment the global financial system. Serving as a coordination and research platform for central banks worldwide, BIS’s analysis raises serious questions about the future of privately issued digital currencies.
Core criticisms of stablecoins
In its assessment, BIS found that stablecoins fall short of four key criteria that define sound money: uniqueness, flexibility, interoperability, and integrity. According to the report, currently available dollar-backed tokens resemble investment products based on specific assets more than traditional monetary instruments.
BIS emphasizes that stablecoins do not satisfy the criteria for trustworthy money, and therefore should not be regarded as a permanent solution for payment and settlement infrastructure.
The report notes that stablecoin prices can occasionally detach from their targeted pegs, and redemption processes may suffer delays and operational issues. Such weaknesses, BIS warned, are particularly troubling when it comes to payment finality. The total market size of stablecoins is estimated at around $316–320 billion. More than 99 percent of fiat-backed tokens are linked to the US dollar, with the majority of activity centered around USDT and USDC.
BIS economists also modeled scenarios in which the stablecoin market grows to $1 trillion, $2 trillion, or even $3 trillion. In all cases, they calculated a limited but negative impact on economic efficiency. Increased bank funding costs and weaker lending capacity, according to BIS, would offset any potential benefits.
Dollarization warning for emerging markets
For developing economies experiencing currency instability, the BIS report contains a more severe warning. The bank describes the shift by savers in these countries toward dollar-pegged digital assets as “stablecoin dollarization.” This trend, according to the institution, could undermine the effectiveness of local monetary policy and erode the deposit base in domestic banking systems.
Such a shift may restrict access to credit, weaken local financial institutions, and leave economies more exposed to volatile international capital flows.
Critique of open blockchain networks and the proposed alternative
BIS also criticized permissionless public blockchain networks like Bitcoin and Ethereum, arguing that these systems cannot deliver the robust financial infrastructure necessary at an institutional scale. According to the report, increased transaction volumes can drive up fees and lengthen confirmation times, revealing fundamental structural limitations.
Another major concern for BIS is the absence of a clear governance framework and a designated entity responsible for regulatory compliance within these blockchain ecosystems.
BIS advocates for a “unified ledger” model that merges tokenized central bank money and commercial bank deposits within the same programmable infrastructure, arguing this approach offers greater security.
Instead of calling for an outright ban, BIS proposes an alternative architecture in which tokenized central bank currencies, tokenized commercial bank deposits, and other regulated financial instruments function together in a single, integrated system. The institution cited Project Agora—a cross-border payment initiative involving eight central bank authorities and over 40 private sector participants—as a practical example of how such a model could be implemented.
