Bank of England officials: Stablecoins may reinforce the dominance of the US dollar and increase the demand for US Treasury bonds

Carolyn Wilkins, a member of the Bank of England (BoE) Monetary Policy Committee, stated that the growth of dollar stablecoins may reinforce the global dominance of the dollar and increase the demand for U.S. Treasury bonds. She pointed out during a speech at Queen's University Belfast that dollar stablecoins can facilitate cross-border settlements and expand access to dollar-denominated assets outside the United States.

Stablecoin issuer Tether's USDT and fintech company Circle's USDC held nearly $150 billion in U.S. Treasury bonds by the end of 2025, purchasing about $33 billion that year. Wilkins noted that large-scale stablecoin redemptions could force issuers to sell Treasury bonds, thereby amplifying volatility in pressured markets. Currently, the total circulation of stablecoins has exceeded $300 billion, with 98% of their value pegged to the dollar. Wilkins stated that this gives the dollar a significant first-mover advantage, and the development of the stablecoin market has implications beyond the cryptocurrency sector.

The development of pound stablecoins is relatively slow. The UK's Financial Conduct Authority has tested potential issuers through a dedicated regulatory sandbox and finalized the UK's stablecoin issuance rules in June; the Bank of England has also tested the feasibility of using stablecoins alongside a simulated digital pound for cross-border trade payments.