Dollar Stablecoins Give Greenback 'Considerable First-Mover Advantage'

The rapid growth of dollar-pegged stablecoins has given the US dollar a significant advantage in global finance, according to Carolyn Wilkins, an external member of the Bank of England's Financial Policy Committee.

Dollar stablecoins now account for nearly 98% of the market, which has swelled to approximately $300 billion in circulation. The concentration of these digital tokens gives the dollar a 'considerable first-mover advantage' over competing currencies, said Wilkins in a speech at Queen's University Belfast.

The official noted that stablecoins have made cross-border settlement more efficient and increased access to dollar-linked assets for users outside the US. This has resulted in the tokens potentially extending 'dollarization into digital markets' while funneling additional funds into short-term US government securities.

The largest stablecoin issuers, such as Tether and Circle, have become significant participants in the short-term Treasury market, holding nearly $150 billion in Treasury bills at the end of 2025. This has already led to substantial demand for US government debt, with modest downward pressure on short-term Treasury yields.