Dollar-denominated stablecoins could reinforce the US dollar's global dominance and increase demand for US Treasurys, according to Carolyn Wilkins, a member of the Bank of England's Financial Policy Committee.
In a speech delivered Tuesday at Queen's University Belfast, Wilkins said the growing market for digital dollars carries consequences well beyond the crypto sector. She noted that stablecoins make cross-border settlement easier, expand access to dollar-linked assets outside the United States, and raise Treasury demand because issuers hold reserves in US government debt.
The largest stablecoin issuers are already major buyers of US debt. Data cited by Wilkins showed that Tether's USDT and Circle's USDC together held nearly $150 billion in Treasury bills at the end of 2025, having purchased roughly $33 billion during the year.
However, Wilkins cautioned that the relationship cuts both ways. At sufficient scale, mass stablecoin redemptions could force issuers to sell Treasury bills, potentially amplifying volatility in an already stressed market.
Stablecoin adoption continues to expand, with more than $300 billion now in circulation. The market remains overwhelmingly tied to the US dollar, which accounts for 98% of stablecoin value—a concentration Wilkins described as giving the greenback a "considerable first-mover advantage."
British pound-denominated stablecoins have been much slower to gain traction. UK regulators have taken several steps this year to encourage development. The Financial Conduct Authority began testing prospective stablecoin issuers through a dedicated regulatory sandbox and finalized rules for UK stablecoin issuance in June. The Bank of England has also experimented with digital money, including a recent test of whether stablecoins and a simulated digital pound could operate together for cross-border trade payments.
The shift follows industry criticism that the BoE's proposed rules could stifle innovation, prompting the central bank to adopt a more accommodating approach to stablecoins.
