Top central bankers have delivered a scathing assessment of stablecoins, saying they “perform badly” on key requirements for being widely used as money, disavowing US President Donald Trump’s push to make them a pillar of mainstream finance.
The Bank for International Settlements said stablecoins fail the three main tests of any money because they are not backed by central banks, lack sufficient guardrails against illicit usage and do not have the flexibility of funding needed to generate loans.
Stablecoins are designed to act as a bridge between volatile crypto assets such as Bitcoin and traditional monetary systems by tracking the value of fiat currencies with one-for-one backing in safer assets such as government bonds and money market funds.