Stablecoins Fuel US Dollar Dominance and Treasury Demand
According to Carolyn Wilkins, a member of the Bank of England's Financial Policy Committee, the growth 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 make cross-border settlement easier, expand access to dollar-linked assets outside the US, and boost demand for Treasurys held as reserves.
The largest stablecoin issuers, Tether's USDt (USDT) and Circle's USDC (USDC), are significant buyers of US government debt. They collectively held nearly $150 billion in Treasury bills at the end of 2025 and bought roughly $33 billion during the year, according to Wilkins.
However, Wilkins warned that the relationship between stablecoins and Treasurys is not one-sided. At sufficient scale, mass stablecoin redemptions could force issuers to sell Treasury bills, potentially amplifying volatility in an already stressed market.