BIS Annual Economic Report concludes stablecoins fail key tests of money and flags emerging-market risks

What happened

The BIS published chapter III of its 2026 Annual Economic Report, 'Anchoring trust in money: innovation beyond stablecoins', on 23 June 2026, together with a press release arguing that the next-generation monetary system must be anchored in central bank money. The chapter tests stablecoins against the singleness of money, the elasticity of supply and the integrity of the payment system, and concludes that they fail all three as a general-purpose form of money, while accepting they perform specific functions. It argues that tokenization delivers its benefits when built around central bank reserves, commercial bank money and government bonds on a unified ledger rather than around privately issued tokens. The report devotes particular attention to emerging markets, warning that widespread dollar stablecoin use can hollow out domestic bank deposits, accelerate dollarization and provide a channel that bypasses capital flow management measures.

Why it matters

The BIS chapter is the clearest institutional statement of the case against stablecoins as money, and it arrives while the EU, UK and US are calibrating their frameworks. Its analytical claims, particularly on elasticity (the ability of a monetary system to expand supply on demand), are the arguments regulators cite when requiring central bank reserve backing or capping issuance. For emerging-market central banks the report supplies a rationale for restricting foreign-currency stablecoins rather than licensing them, which puts it in tension with the payment-cost evidence from remittance corridors in Africa and Latin America.

What is not settled

The BIS does not quantify the deposit substitution or capital-flow effects it describes for any named country, and the chapter's counterfactual, a unified ledger built on central bank money, has no production deployment at comparable scale.