Could Stablecoins Reshape the Digital Future of Central Banking?

By Dražen Kapusta and Terence Tse

Once seen as the immature younger sibling of Bitcoin, stablecoins are fast achieving de facto acceptance in a range of financial contexts worldwide. So remarkable is the stablecoin effect that central banks would be wise to adopt a proactive posture towards the phenomenon – and do it soon.

A recent study has sparked intense debate about Bitcoin’s potential role in central bank reserves by 2030.¹ While this may have dominated financial headlines, a more subtle but equally consequential transformation is occurring: stablecoins are fundamentally altering the plumbing of global finance in ways that directly impact central banking operations.

While Bitcoin may eventually achieve reserve status, stablecoins have already gained significant traction in mainstream financial infrastructure. As a result, central banks may face a new challenge: how to respond to the increasing influence of stablecoins over traditional monetary transmission mechanisms.

The infrastructure impact that central banks cannot ignore

The stablecoin market capitalisation has increased from $10 billion five years ago to about $260 billion today,² with forecasts reaching $2 trillion by 2028.³ This growth signifies more than just speculative investment; it demonstrates the real adoption of alternative payment systems that operate alongside traditional, government-regulated financial systems.

Major corporations, including Stripe, Visa, and Uber, have all signalled their intention to use stablecoins in running their businesses. But the impact extends beyond company efficiency. When Uber considers stablecoins for cross-border payments to reduce currency costs, it signals a shift in how multinational corporations manage liquidity – a development that directly influences foreign exchange markets and the effectiveness of monetary policy.

Central banking in a multi-rail world

Stablecoins can both strengthen dollar dominance globally and weaken central bank control over dollar flows.

The US dollar as a central reserve currency has been declining, dropping from 60 per cent in 2000 to 43 per cent in 2024.⁴ However, most stablecoins today are backed by US government bonds. If the demand for stablecoins continues to rise, the demand for US dollars will also increase. This could pose a dilemma for the Federal Reserve and other central banks in the future: stablecoins can both strengthen dollar dominance globally and weaken central bank control over dollar flows. Additionally, US dollar-pegged stablecoins are very likely to expand the dollar’s reach into countries with currency instability or capital controls. Yet, central banks cannot directly influence this using existing monetary policy tools.

Indeed, the US Treasury’s warning that $6.6 trillion in commercial bank deposits could migrate to stablecoins illustrates this challenge.⁵ Such migration would not necessarily reduce demand for dollars, but it would alter how central banks influence money supply and interest rate setting to manage the economy.

Regulatory frameworks: The missing piece

Recent legislation like the Genius Act in the US represents initial steps toward comprehensive stablecoin regulation, requiring issuer registration and precise reserve requirements. Nonetheless, regulatory frameworks remain incomplete. Central banks worldwide are confronting a key question: Should stablecoins be regulated as means of payment, securities, or banking products? How can monetary authorities preserve policy effectiveness when large transaction volumes move through unregulated digital channels?

The European Union’s Markets in Crypto-Assets (MiCA) regulation and similar frameworks developing worldwide indicate recognition of these challenges. However, implementation remains inconsistent, creating regulatory arbitrage opportunities that could centralise stablecoin issuance in jurisdictions with less oversight.

The Central Bank Digital Currency response

Many central banks are reacting to the rise of stablecoins with Central Bank Digital Currencies (CBDCs). On paper, CBDCs would provide government-issued digital alternatives that preserve central bank control over digital money systems. However, the timeline disconnect is considerable. While CBDCs remain primarily experimental, stablecoins are gaining real-world acceptance today. This creates an opportunity where private stablecoins could become so embedded in the financial infrastructure that CBDCs would struggle to compete for importance.

Stablecoins have already begun to influence their economic and policy landscapes. Countries like Nigeria and Turkey, where citizens have adopted stablecoins to achieve currency stability and evade capital controls, face difficult policy decisions. Strict restrictions and stringent controls on stablecoins could push activity underground, while broader acceptance might weaken domestic monetary policy.

Stablecoins present several risks for central bank consideration:

• Concentration risk: The stablecoin market remains highly concentrated among a few issuers. Circle’s USDC and Tether’s USDT dominate market share, creating single points of failure that could pose systematic risk implications.
• Backing asset quality: While designed for stability, the assets supporting stablecoin reserves vary considerably among issuers, from government bonds to algorithm-driven supply and demand. This could pose a moral hazard problem for central banks and further heighten systematic risk.
• Operational dependencies: Increasing corporate reliance on stablecoins for treasury operations generates new systemic dependencies. Any payment system disruptions related to stablecoins could impact real economic activity more directly than traditional cryptocurrency volatility.
• Cross-border surveillance: Stablecoins enable cross-border transactions outside conventional correspondent banking networks, potentially complicating efforts to monitor capital flows and enforce sanctions or capital controls.

Strategic considerations for central banks

With stablecoins becoming ever more mainstream, central banks might consider different strategic engagement approaches, including:

• Enhanced monitoring: Building advanced surveillance systems to track stablecoin transactions and their possible influence on the transmission of monetary policy and financial stability.
• Regulatory coordination: Working with international counterparts to create consistent global standards that prevent regulatory arbitrage while preserving the advantages of innovation.
• Infrastructure partnership: Exploring ways to integrate stablecoin infrastructure with existing systems to enable better oversight while improving efficiency.
• Policy tool development: Investigating new monetary policy instruments that can effectively influence economic activity within a multi-rail financial system.

Coexistence, not competition

At their current development trajectories, stablecoins are here to stay. Central banks must evolve from viewing stablecoins as competitive threats to recognising them as tools that can improve overall system functionality when properly regulated. These authorities face a choice between reactive regulation after issues arise or proactive measures that direct development towards outcomes aligned with monetary policy objectives. Financial progress rarely follows a straight path – gold faced scepticism and volatility before achieving reserve status.⁶

Stablecoins pose a similar, yet more immediate, challenge. Their adoption is driven by genuine utility rather than speculative investment, making their growth path more predictable but also more irreversible. Central banks that understand and prepare for this shift will be better equipped to maintain the effectiveness of their monetary policies in an increasingly digital financial landscape. The question is not whether stablecoins will reshape central banking – they are already doing so. The real question is whether monetary authorities will help steer this transformation towards outcomes that preserve financial stability while embracing the benefits of technological innovation.

About the Authors

Dražen Kapusta is the founder of COTRUGLI Business School and HashNET. He leads the COTRUGLI initiatives, focusing on AI-augmented Vanguard leadership, NEO Finance, blockchain, SDGs, and digital sovereignty. Dražen advises UN and EU bodies on AI and blockchain strategies.

Terence Tse is Professor of Finance at Hult International Business School and co-founder at the AI Native Foundation. He is also co-founder and Executive Director of Nexus FrontierTech.

References

1. Laboure, Marion and Siazon, Camilla (2025) Bitcoin vs. Gold: The Future of Central Bank Reserves by 2030, Deutsche Bank Research Institute

2. Federal Reserve Bank of New York (2025) Stablecoins and Crypto Shocks: An Update

3. Kendrick G., et al. (2025) Stablecoins Supply Projections and Treasury Market Implications, Standard Charter Digital Assets Research

4. Laboure, Marion and Siazon, Camilla (2025) Bitcoin vs. Gold: The Future of Central Bank Reserves by 2030, Deutsche Bank Research Institute

5. Willems, Adam (2025) “The Loophole Turning Stablecoins Into a Trillion-Dollar Fight”, Wired, September 3

6. Laboure, Marion and Siazon, Camilla (2025) Bitcoin vs. Gold: The Future of Central Bank Reserves by 2030, Deutsche Bank Research Institute

Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.