BIS Sounds Alarm on USD Stablecoin Adoption Risks

The Bank for International Settlements (BIS) has expressed concerns about the growing adoption of US dollar-pegged stablecoins, specifically Tether's USDT and Circle's USDC. In a recent statement, BIS head Pablo Hernández de Cos warned that these stablecoins pose a risk to monetary sovereignty and could lead to 'digital dollarization.'

The widespread use of USD-based stablecoins outside the US would weaken local domestic monetary policies in most countries, according to de Cos. This has sparked concerns among some analysts, with adjunct professor Austin Campbell at Columbia Business School predicting that USD stablecoins will destroy 50%+ of currencies within 30 years.

The BIS head also downplayed the global scale of usage of stablecoins, pointing out that their transactions dropped by 37% this summer. However, some countries are already showing significant traction with these stablecoins, such as Bolivia, which is considering making Tether's USDT a local tender.