Stablecoins Fuel Dollar Dominance and US Treasury Demand

The rise of stablecoins could strengthen the global dominance of the US dollar and increase demand for US Treasurys, according to a Bank of England official.

Carolyn Wilkins, a member of the Financial Policy Committee at the Bank of England, said that dollar-denominated stablecoins make cross-border settlement easier and expand access to dollar-linked assets outside the US.

This could lead to increased demand for Treasurys held as reserves, which would be beneficial for the US economy. Wilkins noted that the largest stablecoin issuers are already significant buyers of US government debt, with Tether's USDt (USDT) and Circle's USDC (USDC) holding nearly $150 billion in Treasury bills at the end of 2025.

However, Wilkins also warned that mass stablecoin redemptions could force issuers to sell Treasury bills, potentially amplifying volatility in an already stressed market.