Central banks warn stablecoins are a monetary threat

Central banks are shifting from debating whether stablecoins are “risky” to treating them as a potential monetary threat with system-wide effects. On April 20, BIS (Bank for International Settlements) General Manager Pablo Hernandez de Cos said global cooperation on stablecoins is “critically important,” highlighting run risk, faster dollarization in developing economies, and regulatory fragmentation that private issuers could exploit across borders. Stablecoins—led by Tether’s USDT and Circle’s USDC—now total about $315B in circulation, with the top two issuers holding roughly 85% of supply. Central banks are especially focused on the banking deposit “drain.” If households move from insured bank accounts to yield-like stablecoin wallets, banks may lose funding, fees, and customer data. The ECB has warned stablecoins could simultaneously harm European banks via deposit loss and risk transmission from dollar markets. The Fed also cautioned that a large stablecoin sector outside banks could weaken monetary-policy transmission, since Fed tools rely on the banking system. Reported estimates cited in the article range from banks losing hundreds of billions in deposits (US banking lobby estimate: ~ $500B by 2028) to emerging markets losing up to ~$1T, with Citi projecting issuance of $1.9T by 2030 (or $4T in higher-adoption scenarios). Europe remains split: France’s finance minister Roland Lescure criticized euro-pegged stablecoin volumes as “not satisfactory” and backed a European consortium (Qivalis) for a euro-denominated stablecoin, while the Banque de France’s Denis Beau pushed for stricter MiCA limits on non-euro stablecoins used in everyday payments. The article frames the core trade-off: regulators may reclassify stablecoins as payment utilities, deposit substitutes, or shadow money-market products—decisions that will shape liquidity, compliance, and market structure for years.