A new report from the Bank for International Settlements (BIS) challenges the notion that stablecoins can serve as real money in a modern financial system.
Stablecoins Fail Tests of Singleness and Elasticity
According to the BIS Annual Economic Report 2025, stablecoins fail to meet essential criteria of 'singleness,' 'elasticity,' and 'integrity.' The BIS describes stablecoins as 'digital bearer instruments' that resemble financial assets more than true money. This raises concerns about their effectiveness as the cornerstone of the monetary system.
Integrity Issues with Stablecoins
The second test of ‘elasticity’ shows that stablecoins lack the needed flexibility to absorb market shocks and fulfill large-value payment demands. The BIS notes that any additional supply of stablecoins requires full upfront payment, in contrast to modern banking systems' capabilities. Regarding 'integrity,' the report claims significant vulnerabilities in stablecoins, particularly related to financial crimes.
Limited Role for Stablecoins
While acknowledging the increasing interest and demand for stablecoins due to features like cross-border transactions and lower costs, the BIS emphasizes that these instruments should have a strictly limited and regulated role in the financial sector. The report cautions that 'society must re-learn historical lessons about the limitations of unsound money.'
The BIS report highlights important aspects regarding stablecoins, including their shortcomings as monetary instruments and the need for stringent regulation in their use.
