Bank of England Financial Policy Committee member Carolyn Wilkins warned Tuesday that the rapid growth of dollar-denominated stablecoins could further entrench the U.S. dollar’s global dominance while creating new channels of financial volatility.
Speaking at Queen’s University Belfast, Wilkins outlined how stablecoins pegged to the greenback simplify cross-border settlement, expand international access to dollar-linked assets, and drive demand for U.S. Treasurys held as reserves by issuers.
Stablecoin Issuers Now Major Buyers of U.S. Debt
The scale of this dynamic is already significant. According to data cited by Wilkins, the two largest stablecoin operators—Tether’s USDT and Circle’s USDC—held nearly $150 billion in Treasury bills at the end of 2025 and purchased roughly $33 billion during the year.
“This gives the currency what Wilkins described as a “considerable first-mover advantage.””
Redemption Risk Could Amplify Market Stress
However, Wilkins emphasized that the relationship cuts both ways. At sufficient scale, mass stablecoin redemptions could force issuers to liquidate Treasury holdings rapidly, potentially amplifying volatility in an already stressed market.
UK Pushes Pound Stablecoins as Dollar Dominates
Wilkins’ comments come as total stablecoin circulation exceeds $300 billion, with the U.S. dollar accounting for 98% of that value. By contrast, British pound-denominated stablecoins have struggled to gain traction.
UK regulators have moved to close the gap this year. The Financial Conduct Authority launched a dedicated regulatory sandbox to test prospective stablecoin issuers and finalized issuance rules in June. The Bank of England has also conducted experiments, including a recent test of whether stablecoins and a simulated digital pound could operate together for cross-border trade payments.
The shift reflects a more accommodating stance from the Bank of England after industry criticism that its earlier proposals risked stifling innovation.