The Bank for International Settlements has escalated its warnings about stablecoins, identifying them as emerging threats to monetary systems worldwide. Dollar-pegged tokens now face scrutiny for their potential to disrupt liquidity conditions and transmit financial contagion across borders.

Pablo Hernández de Cos underscored these risks during a Tokyo policy seminar, comparing stablecoins' behavior more to exchange-traded funds than functional currency. 'Redemption frictions and price deviations undermine their stability,' he noted, highlighting structural flaws in reserve assets backing major tokens like Tether and USDC.

The BIS report calls for coordinated global regulation to prevent market fragmentation, emphasizing that current designs remain unfit for large-scale monetary use despite their efficiency in cross-border settlements.