On September 30, Swiss National Bank board member Petra Tschudin told an audience in Zurich that the central bank is cautious about large stablecoins. She said a big stablecoin sector sitting far from the existing two-tier financial system “increases the burden on central banks in fulfilling their mandate.” Her concern was simple. If households and businesses move money out of commercial banks and into stablecoins, banks have less to lend, and a change in the policy rate has less influence on borrowing costs.
The timing matters. Nine days earlier, on September 21, the Eurosystem launched Pontes, which lets wholesale tokenised transactions settle in central bank money. On September 30, the US Treasury published an interim final rule on how states can certify their stablecoin rules under the GENIUS Act, and the Act itself is expected to take effect on January 18, 2027. The debate is no longer about whether stablecoins will arrive. It is about what sits underneath them.
The Quiet Channel
The sharpest argument is about banks, not coins. An ECB working paper published in March found that stablecoin adoption moves money from retail deposits into digital assets, which pushes banks towards wholesale funding and can limit how much they lend. The paper also warned that foreign currency stablecoins can bring foreign monetary and financial shocks straight into the euro area.
That matters because nearly the whole market is tied to one currency. The Bank for International Settlements (BIS) says 99.4% of fiat-backed stablecoins are pegged to the US dollar, and the market was worth around $320 billion at the end of May 2026. In practice, monetary sovereignty here is a question about the dollar.
Two Worries for Two Kinds of Economy
In bank-based systems like the euro area, the worry is funding and how policy reaches the economy. In emerging markets it is dollarisation. The BIS warns of stablecoin dollarisation, where demand for foreign stablecoins could reshape capital flows and challenge monetary sovereignty.
India shows how seriously some authorities take this. Reuters reported in July, citing government documents, that the Reserve Bank of India (RBI) wants banks barred from exposure to privately issued stablecoins. It sees foreign currency tokens as a risk to sovereignty and rupee tokens as a risk to government income from issuing currency. Those documents show a stated preference, not a final rule, and Indian banks are not legally barred from dealing with crypto today.
The Case for Staying Calm
Not everyone thinks the danger is close, though. Even if stablecoins grew to $1 trillion, $2 trillion or $3 trillion, the BIS’s own model, built on US data, shows only a small effect on economic output. The report also points out that the whole stablecoin market is still small next to the trillions of dollars sitting in bank deposits. The Bank of Korea has called the sovereignty alarm “excessive marketing rhetoric” and said the scenario would mainly threaten countries with severe inflation.
Both views can be true together. The ECB paper itself suggests current effects look limited, and that scale and dollar dominance will decide the outcome.
What Banks Should be Asking
If central banks answer by putting their own money on the chain, banks become the main way people reach it. That could help them or squeeze them. The BIS argues that tokenised central bank reserves could keep private digital money redeemable at full value, and the ECB says central bank money should stay at the centre of settlement. In the US, the OCC’s proposed GENIUS rules cover subsidiaries of national banks, so banks can get into the business through those subsidiaries. There is a catch. A bank that issues its own token may end up moving its own customers’ deposits off its balance sheet.
There is also a timing problem. US agencies missed the July 2026 deadline for final rules, and a November OCC rule would give prospective issuers only weeks before the January effective date. Banks will be making product decisions before the rulebook is fully settled.
What It Could Mean
For ordinary customers none of this will feel urgent, and any effect would arrive slowly. Savers may get more choice over how they hold digital dollars or euros. Banks may need to pay more to keep deposits, and the BIS says they would probably reprice some loans in response. Cross-border transfers could get faster and cheaper, although the BIS finds that results so far are uneven. Central banks may find that some of their usual tools work a little differently. None of this is certain, and much depends on how quickly stablecoins grow and how regulators shape them.
Herald View
Stablecoins do not threaten monetary sovereignty simply by existing. The real risk is a gap, where people want faster and cheaper digital money and the public system is slow to offer it. Pontes and the digital euro are attempts to close that gap. For banks, the choice is whether to build on central bank rails, issue their own tokens, or watch deposits drift elsewhere. Those that act will keep their place in the chain. Those that wait may find the chain has moved.
