Stablecoins Fuel Dollar Dominance, Warns Bank of England Official

Bank of England official Carolyn Wilkins warned that the rise of stablecoins could reinforce the US dollar's global dominance and increase demand for US Treasurys. In a recent speech at Queen's University Belfast, Wilkins stated that dollar-denominated stablecoins could strengthen the greenback by making cross-border settlement easier and expanding access to dollar-linked assets outside the US.

The largest stablecoin issuers, such as Tether's USDt (USDT) and Circle's $USDC ($USDC), are already significant buyers of US government debt. According to Wilkins, these two issuers held nearly $150 billion in Treasury bills at the end of 2025 and bought roughly $33 billion during the year.

However, Wilkins cautioned that the relationship between stablecoins and Treasurys is not one-sided. She argued that mass stablecoin redemptions could force issuers to sell Treasury bills, potentially amplifying volatility in an already stressed market.