The Bank for International Settlements released its Annual Economic Report 2026 at its yearly general meeting in Basel, Switzerland, arguing that stablecoins do not measure up as money. The report chapter titled 'Anchoring trust in money: innovation beyond stablecoins' judges current dollar-pegged tokens against four foundational properties — singleness, elasticity, interoperability, and integrity — and finds them deficient on all counts. The BIS, which serves as a forum for central banks and sets international financial standards, put total stablecoin market value at roughly $320 billion at the end of May with more than 99% of fiat-backed supply pegged to the U.S. dollar.
BIS Identifies Four Structural Deficiencies in Stablecoins
The report argues that stablecoin prices deviate from their pegs in secondary markets and redemptions involve friction. The authors state that the tokens resemble exchange-traded fund shares more than a means of payment. BIS General Manager Pablo Hernández de Cos made similar comments in April, describing stablecoins as functioning more like ETFs than money. The assessment focuses on whether current designs meet the four properties the BIS holds as necessary for any monetary system: singleness, elasticity, interoperability, and integrity.
Stablecoin Market Remains Dollar-Dominated at $320 Billion
The BIS put total stablecoin market value at roughly $320 billion at the end of May. More than 99% of fiat-backed supply is pegged to the U.S. dollar, with most split between Tether's USDT and Circle's USDC. The report notes that overall stablecoin supply remains relatively small next to the banking system. The Block's data reinforce the dominance of USDT and USDC over other leading offerings, including some decentralized or yield-bearing stablecoins.
BIS Model Projects Negative Economic Impact at Scale
The report's main new analysis models what widespread adoption would do to the economy depending on what issuers hold in reserve. In the authors' U.S.-calibrated model, the net effect of stablecoins on output turned slightly negative over the medium term. Higher bank funding costs and weaker lending outweighed the fiscal room created by stablecoin demand for government debt. The drag stayed small even as the authors imagined stablecoins hitting $1 trillion, $2 trillion, and $3 trillion in market value.
Report Warns of Illicit Use and Emerging-Market Dollarization Risks
The BIS said stablecoins account for a significant share of illicit onchain activity because they circulate on permissionless blockchains where pseudonymity and self-custodied wallets weaken know-your-customer and anti-money-laundering checks. The authors warned of 'stablecoin dollarization,' in which households in emerging economies hold dollar-referenced tokens as a store of value. This phenomenon could reshape capital flows and erode monetary sovereignty in those jurisdictions.
BIS Proposes Unified Ledger as Alternative Framework
The BIS report suggested an alternative approach: address the weaknesses in current stablecoins through internationally consistent rules and bring tokenization into the two-tier system of central banks and commercial banks. The centerpiece would be a 'unified ledger' holding tokenized central bank reserves, tokenized commercial bank money, and other regulated private money in one venue with central bank money as the anchor. The bank pointed to Project Agora, a cross-border payments prototype involving eight central banks, the BIS, and more than 40 private institutions, as evidence the model can work.
FAQ
What did the BIS say about stablecoins in its Annual Economic Report 2026?
The Bank for International Settlements released its Annual Economic Report 2026 at its general meeting in Basel, Switzerland, arguing that stablecoins do not measure up as money. The report judges current dollar-pegged tokens against four foundational properties — singleness, elasticity, interoperability, and integrity — and finds them deficient on all counts. The BIS put total stablecoin market value at roughly $320 billion at the end of May with more than 99% of fiat-backed supply pegged to the U.S. dollar.
How does the BIS model predict stablecoins will affect the U.S. economy?
In the BIS's U.S.-calibrated model, the net effect of stablecoins on output turned slightly negative over the medium term. Higher bank funding costs and weaker lending outweighed the fiscal room created by stablecoin demand for government debt. The drag stayed small even as the authors imagined stablecoins hitting $1 trillion, $2 trillion, and $3 trillion in market value.
