The Bank for International Settlements didn’t mince words in its latest annual report. Stablecoins, despite their growing footprint in global finance, still don’t measure up as money. The BIS argument rests on three pillars: singleness, elasticity, and integrity.
Singleness means one unit always equals another. A dollar is a dollar, regardless of who holds it or where. Stablecoins? Not so much. Different issuers back their tokens with different reserves, and those reserves vary in quality and transparency. You’re trusting the issuer, not the unit itself.
Elasticity refers to the ability to expand and contract supply in response to demand — something central banks do routinely. Stablecoins can’t do this. Their supply grows when people mint more, shrinks when they redeem. There’s no institutional mechanism to manage liquidity in a crisis.
Then there’s integrity. The BIS points out that stablecoin governance often lacks the regulatory oversight and consumer protections that come with traditional money. If something goes wrong, who’s accountable?
The report also flags risks for emerging markets specifically. In countries with weaker financial infrastructure, stablecoins can quickly displace local currencies — not because they’re better, but because the alternative is worse. That substitution can undermine monetary policy and capital flow controls.
The BIS isn’t saying stablecoins are useless. But they’re arguing, firmly, that calling them money stretches the definition. For now, they remain a financial instrument — one that mimics money without fulfilling its core functions. That distinction matters, especially as regulators decide how to treat them.
