Bank of England Policymaker Discusses Risks and Benefits of Dollar Stablecoins

Bank of England policymaker Carolyn Wilkins stated that while dollar-backed stablecoins could enhance the global reach of the U.S. dollar and increase demand for U.S. government debt, their rapid growth poses financial stability risks. With stablecoin circulation reaching approximately $300 billion, Wilkins emphasized the need for high-quality reserves, liquidity management, and clear regulatory frameworks. She noted that stablecoins could streamline cross-border settlements and provide access to dollar-linked assets in regions with unstable currencies, though the 2023 Silicon Valley Bank collapse highlighted the dangers of reserve mismanagement.