July 21, 2025
By Our Correspondent
According to the gatekeeper of the world’s central banks, the emergence of stablecoins presents new difficulties to the global infrastructure for quick payment, clearing, and settlement, necessitating a revision of the rules governing the global financial system for a token-based future.
The Bank for International Settlements (BIS), which is frequently referred to as the “central bank of central banks,” stated that stablecoins, which are digital tokens backed by fiat currencies or other reserve assets, could make anti-money-laundering (AML) work and banks’ task of getting to know their customers more difficult due to their cross-border, pseudonymous transactions.
Shin Hyun-song, the economic adviser and head of BIS’s monetary and economic department, told the South China Morning Post in an interview that stablecoins are at the forefront of the policy discussion and that the monetary system’s regulations are evolving.
“[Stablecoin] is an international tool that serves primarily as the entry point to the cryptocurrency ecosystem and other decentralized financial platforms, but it also creates a lot of new kinds of problems.”
The hoopla surrounding stablecoin issuer Circle Internet Group, whose stock price has increased sevenfold in just one month since its June 5 first public offering in New York, has made the difficulties worse.
Regulators, notably the Hong Kong Monetary Authority, are paying close attention to the buzz because the city’s first stablecoin regulation is about to go into force in two weeks.
Since the Basel, Switzerland-based bank presented its vision of a single ledger that leverages blockchain technology and tokens to harmonize money and assets into a shared, global infrastructure, the BIS has been hammering home its cautions about the difficulties of stablecoins.
Like tokenized deposits and central bank digital currencies, which BIS favored for its innovation initiatives, stablecoins are a means of implementing tokenization.
Their extensive use, particularly when linked to foreign currencies, may jeopardize domestic monetary sovereignty, and their significant holdings of treasury bills may have an impact on market stability and short-term interest rates amid sudden inflows or outflows, according to BIS.
These problems might surface in the context of increased de-dollarization debates and concerns about the US dollar’s ability to maintain its value and standing as a safe-haven investment.
Indeed, the US dollar continues to be the most widely used currency, supporting the US$255 billion worth of stablecoins worldwide. About 90% of the market capitalization is made up of Tether’s USDT and Circle’s USDC, which is double what it was just two years ago.
