The Bank for International Settlements (BIS) has published a new report arguing that stablecoins are not suitable to act as real money in today’s financial system.
The report, published on June 24, stated that these digital tokens do not meet the basic qualities expected from a national currency.
According to the BIS, money should be used uniformly everywhere, be flexible enough to respond to changes in demand, and be protected from misuse.
Did you know?
Subscribe – We publish new crypto explainer videos every week!
What is a Crypto Mining Rig? Is it Worth it? (EASILY Explained)
First, the BIS said stablecoins fall short on “singleness”, which means they do not always keep a fixed value. Unlike central bank money, which is accepted at the same rate by everyone, stablecoins often trade above or below their stated value.
Next is the issue of “elasticity”, or how easy it is to adjust the supply of money when needed. The BIS explained that stablecoins cannot grow as quickly as demand requires. New tokens can only be created when users first pay for them in full.
The report also mentioned “integrity” as another issue. Many stablecoins, especially those used through unhosted wallets on public blockchains, are vulnerable to misuse. They pose a higher risk for illegal activity, such as money laundering or avoiding sanctions, because they can be used without identity checks.
Furthermore, the report warned that allowing stablecoins to grow without strict regulations could repeat past financial mistakes. The BIS called on central banks and regulators to step in and guide the system in a safer direction.
Meanwhile, the Bank of Korea (BOK) called for a slow and controlled introduction of stablecoins in the country. What did it say? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
