BIS Annual Report Flags Stablecoin Shortfalls as Money
The Bank for International Settlements says stablecoins lack key money properties and warns of risks in emerging markets.
The Bank for International Settlements (BIS) released its annual report on Tuesday, arguing that stablecoins still fall short of fulfilling the functions of money. The report cites three specific deficiencies: singleness, elasticity, and integrity.
Key Deficiencies Identified
According to the BIS, stablecoins lack 'singleness' — the ability to be used interchangeably with other forms of money at par value. They also fail on 'elasticity,' meaning their supply does not adjust automatically to demand changes. Additionally, stablecoins raise 'integrity' concerns related to governance and regulatory compliance.
The report further warns that stablecoin adoption in emerging-market economies could amplify financial risks, particularly if they are used for dollar substitution or evade capital controls.
- Singleness: stablecoins are not always redeemable at par with fiat currencies.
- Elasticity: supply cannot automatically adjust to shifts in demand.
- Integrity: concerns over governance, transparency, and regulatory compliance.
The BIS, often called the central bank for central banks, publishes its annual economic report each June. The findings add to a growing body of regulatory scrutiny over stablecoins globally.