BIS: Stablecoins Fail Key Tests of Real Money
The Bank for International Settlements (BIS) report asserts that stablecoins do not meet essential criteria for effective monetary instruments, specifically “singleness,” “elasticity,” and “integrity.” Stablecoins are characterized as “digital bearer instruments” that resemble financial assets rather than true money. They are issued by private entities and often trade at fluctuating rates, undermining monetary singleness. The report highlights that stablecoins require full upfront payment for additional supply, lacking the flexibility of central bank-backed money. Furthermore, stablecoins are vulnerable to financial crimes, including money laundering and terrorist financing, failing the integrity test. While acknowledging their demand for cross-border transactions and lower costs, the BIS recommends a limited, well-regulated role for stablecoins. The report praises tokenization as a transformative innovation for the financial system. Following the report, Circle's stock dropped over 15%. Some in the crypto community criticized the BIS's stance as overly negative and reflective of central bank biases.
