Stablecoin Growth Sparks Warning of Dollar Dominance and US Treasury Volatility

Carolyn Wilkins, a member of the Bank of England's Financial Policy Committee, warned that stablecoin growth could boost dollar dominance and impact US Treasury markets. In her speech at Queen’s University Belfast, she highlighted how dollar-denominated stablecoins make cross-border settlement easier and widen access to dollar-linked instruments outside the United States.

According to Wilkins, this can translate into higher demand for US Treasury bills held by stablecoin issuers. She noted that major issuers already hold large Treasury positions, tying stablecoin growth to government debt demand.

The Bank of England's data suggests that Tether's USDt (USDT) and Circle's USDC (USDC) together held nearly $150 billion in Treasury bills at the end of 2025. Wilkins emphasized a two-way channel, where stablecoin growth can support Treasury demand, but also create stresses for US Treasury markets if redemptions accelerate.