Stablecoins' Rapid Growth May Amplify Liquidity Pressure on US Treasuries

Bank of England Financial Policy Committee member Carolyn Wilkins has warned that the growth of dollar-denominated stablecoins could strengthen the US dollar's international role and create new stresses for US Treasury markets.

Wilkins argued that stablecoins make cross-border settlement easier and widen access to dollar-linked instruments outside the United States, potentially leading to higher demand for US Treasury bills held by stablecoin issuers.

The size of the sector has surpassed $300 billion, with major issuers such as Tether's USDt (USDT) and Circle's USDC (USDC) holding nearly $150 billion in Treasury bills at the end of 2025.

Wilkins cautioned that large stablecoin redemptions could force issuers to sell Treasuries, potentially increasing volatility in stressed market conditions.