Danish Central Bank Sounds Alarm on US Dollar Stablecoin Risks

Danish central bank Danmarks Nationalbank has issued a warning about the risks associated with US dollar stablecoins. The analysis, published on September 9, noted that while adoption of these coins is currently limited in Denmark, their global expansion poses potential indirect vulnerabilities to domestic financial stability.

The report highlighted that the majority of stablecoin usage globally is in U.S. dollar-denominated tokens like USDT and USDC, which could create spillovers through global liquidity channels and the U.S. financial system if turmoil were to occur in foreign markets.

Despite the negligible presence of stablecoins in Denmark, the central bank emphasized that a shift could be on the horizon as commercial banks and new payment applications begin integrating stablecoin infrastructure.

The Danmarks Nationalbank also expressed its opposition to stablecoins replacing central bank reserves as the core settlement asset for interbank transactions. The bank is partnering with the European Central Bank (ECB) to ensure central bank money remains accessible in an increasingly tokenized financial ecosystem.