Debates over the riskiness of stablecoins have given way to concerns about their control and regulation among central banks globally.
On April 20, BIS General Manager Pablo Hernandez de Cos called for international cooperation on stablecoin regulation, emphasizing its critical importance. The Bank for International Settlements, often referred to as the central bank’s central bank, has sharpened its language regarding these concerns, warning of potential runs that could induce market stress and describing how dollar-pegged tokens might hasten the dollarization in developing economies.
Stablecoins, such as Tether’s USDT and Circle’s USDC, which together account for about 85% of the $315 billion circulating stablecoin market, are designed to maintain a consistent value relative to fiat currencies. Despite being backed by reserves including U.S. Treasury bills, their function as private IOUs has raised alarms among central banks due to their potential scale and impact.
Central banks’ primary worry extends beyond peg stability. If issuers cannot uphold the $1 value amid significant redemptions, it can trigger a run that forces rapid liquidation of reserve assets, injecting volatility into Treasury markets. More critically, as stablecoins expand, they could diminish bank deposits, thus eroding the funding base for loans and reducing banks’ fee income from payment settlements on private networks.
The European Central Bank (ECB) has explicitly outlined this risk: stablecoins could simultaneously reduce European banks’ deposit bases, fee incomes, and customer relationships while increasing the influence of dollar-denominated tokens in regions where the euro should be dominant. CryptoSlate reported ECB analyses predicting that $2 trillion in stablecoins would directly transmit American financial stress to European banks by 2025.
Citi’s April 2026 research projected stablecoin issuance could reach $1.9 trillion by 2030, with up to $4 trillion possible under high-adoption scenarios. These figures are now crucial for central bank planning. The Federal Reserve has also raised concerns that a large stablecoin sector outside traditional banking systems may undermine how monetary policy influences the economy, as it operates primarily through banks.
Developed economies face an urgent deposit question: if stablecoins can offer competitive yields, consumers might shift funds from insured accounts to digital wallets, potentially extracting about $500 billion in deposits by 2028. The dollarization issue is more global, with De Cos warning that stablecoins could hasten structural reliance on the dollar in developing nations while facilitating capital control evasion.
Countries like Nigeria, Argentina, and Turkey have already seen households using dollar-pegged stablecoins to protect savings from devaluation, bypassing local systems. Standard Chartered estimates emerging market banks could lose up to $1 trillion in deposits to stablecoins, which the IMF describes as a digital extension of the dollar system, enhancing its dominance more directly than before.
The debate over control is intensifying within European political circles. On April 17, French Finance Minister Roland Lescure criticized current euro-pegged stablecoin volumes and supported Qivalis, a consortium including ING, UniCredit, and BNP Paribas, in developing a euro-denominated stablecoin. Meanwhile, the Banque de France’s First Deputy Governor, Denis Beau, calls for stricter MiCA restrictions on non-euro stablecoins.
Europe is thus navigating dual policies: seeking efficiency from tokenized money movement while resisting private control over it. The regulatory classification of stablecoins—whether as payment utilities, deposit substitutes, or shadow money-market products—will determine how much of the monetary system can be absorbed by private issuers. This ongoing reclassification will shape monetary flows for years to come.
The article originally appeared on CryptoSlate.