Stablecoins Fuel Dollar Dominance and Treasury Demand

Stablecoin growth could boost dollar dominance and US Treasury demand, according to Carolyn Wilkins, a member of the Bank of England's Financial Policy Committee. The rise of stablecoins could make cross-border settlement easier, expanding access to dollar-linked assets outside the US and increasing demand for Treasurys held as reserves.

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

However, Wilkins warned that the relationship cuts both ways. At sufficient scale, mass stablecoin redemptions could force issuers to sell Treasury bills, potentially amplifying volatility in an already stressed market.