Stablecoins Could Boost Dollar Dominance and Treasury Demand

A Bank of England panelist has suggested that the growth of dollar-pegged stablecoins could boost the US dollar's global dominance and increase demand for U.S. Treasuries.

Carolyn Wilkins, a member of the Bank of England's Financial Policy Committee, made this observation in a speech at Queen's University Belfast. She noted that dollar-denominated stablecoins can facilitate cross-border payments, expand access to dollar-linked assets outside the US, and increase demand for U.S. Treasuries held as reserve assets.

The largest stablecoin issuers have already emerged as major buyers of U.S. government debt, with Tether's USDt and Circle's USDC holding about $150 billion in short-term U.S. Treasuries as of end-2025. Wilkins warned that if mass redemptions occur, issuers may have to sell these short-term Treasuries, which could add to volatility in already unsettled markets.

The market size continues to grow, with stablecoins in circulation topping $300 billion and 98 percent of them being dollar-based. This concentration is seen as a backdrop that broadens the dollar's influence, effectively tying international payments and demand for reserve assets around the US.