BIS Annual Report: Stablecoins Are Not Real Money and Pose Serious Risks to Emerging Markets

The Bank for International Settlements (BIS) has delivered a pointed assessment of stablecoins in its latest annual report, concluding that these digital assets fail to meet the fundamental criteria required to qualify as genuine money.

According to the report, stablecoins fall short across three critical dimensions: singleness, elasticity, and integrity. These are the core properties that traditional monetary systems are built upon, and the BIS argues that no stablecoin currently in existence fully satisfies all three requirements.

Singleness refers to the ability of money to maintain a uniform value across different forms and issuers. While stablecoins are designed to maintain a peg — typically to the US dollar — the BIS points out that this peg is not always reliable or consistent, especially during periods of market stress. The collapse of algorithmic stablecoins in recent years has demonstrated how fragile this uniformity can be in practice.

Elasticity, the second criterion, concerns the capacity of a monetary system to expand and contract in response to economic needs. Central banks manage this through monetary policy tools. Stablecoins, being largely driven by market demand and private issuance, lack the institutional mechanisms needed to provide this kind of flexible, demand-responsive supply.

Integrity — the third pillar — relates to trust, legal backing, and resistance to fraud or manipulation. The BIS contends that stablecoins operate in a largely unregulated environment, making them vulnerable to misuse and undermining public confidence in their reliability as a store of value or medium of exchange.

Perhaps most notably, the BIS report raises serious alarms about the potential consequences of stablecoin adoption in emerging markets. Countries with weaker currencies and less developed financial systems could be particularly exposed to the risks associated with widespread stablecoin use. The concern is that digital dollar-pegged assets could accelerate currency substitution, erode local monetary sovereignty, and complicate the ability of central banks in these regions to conduct effective monetary policy.

The BIS has long been a skeptic of private digital currencies, consistently advocating for central bank digital currencies (CBDCs) as a safer and more accountable alternative. This latest report reinforces that institutional stance, framing stablecoins not as an evolution of money, but as a flawed imitation that introduces more risks than it resolves.

As regulatory frameworks around the world continue to take shape, the BIS findings are likely to influence policymakers, particularly in jurisdictions still weighing how — or whether — to integrate stablecoins into their financial ecosystems.