Central bankers warn of risks from US dollar stablecoins

Central bankers warn US dollar stablecoins threaten monetary sovereignty and stability, urging stricter regulation and global coordination to address risks in emerging markets.

Central bankers and financial authorities worldwide are voicing concerns over the rapid growth and adoption of US dollar-pegged stablecoins, particularly in emerging markets. While these digital assets offer benefits like faster cross-border payments and smart contract compatibility, they also pose significant risks. Experts warn that stablecoins could accelerate dollarisation, undermine local currencies, and weaken central bank control, especially in regions facing currency volatility and inflation. These developments threaten monetary sovereignty, financial stability, and the effectiveness of monetary policy. Additional risks include increased potential for financial crime due to regulatory gaps and the risk of contagion if stablecoins act more like investment products than cash. Policymakers in Europe, the UK, and Switzerland are refining regulations, and there is a growing call for stronger global coordination and oversight to address these challenges.