BIS flags stablecoin risks as Spain nominates Hernández de Cos

BIS research finds stablecoins resist capital controls, fueling digital dollarisation. Spain nominates Hernández de Cos for ECB, signaling possible changes in digital asset regulation.

Pablo Hernández de Cos, representing the Bank for International Settlements (BIS), addressed the opportunities and challenges of stablecoins in a speech at the Bank of Japan. He emphasized the importance of international regulatory cooperation to maintain stability and integrity in the evolving cryptocurrency landscape. A recent BIS study revealed that stablecoin dollarisation is driven by economic pressures similar to those behind traditional dollarisation. However, stablecoin usage is more persistent and less impacted by capital controls, making it harder for governments to manage monetary policy and cross-border flows. The study, which covered over 130 economies, found that stablecoin inflows are largely unaffected by capital controls, particularly in emerging markets facing inflation and weak currencies, with significant growth in regions like Nigeria and Latin America. Researchers concluded that stablecoins often operate outside the regulatory perimeter, limiting the effectiveness of traditional restrictions. Additionally, Spain has nominated Hernández de Cos for the ECB presidency, highlighting his influence in digital asset regulation and the digital euro initiative, which could shape stablecoin oversight in Europe.