A Bank of England official has suggested that the rapid rise of dollar-linked digital tokens could support broader use of the US currency and add to demand for American government debt, while also introducing new vulnerabilities if large numbers of holders seek to cash out at once.
Carolyn Wilkins, an external member of the Bank of England’s Financial Policy Committee, made the remarks in a 15 September 2026 speech at Queen’s University Belfast.
She noted that privately issued tokens designed to hold a one-to-one value with the dollar now account for the overwhelming share of the market.
Roughly 98 percent of outstanding stablecoin value is tied to the US currency, giving it what she called a considerable first-mover advantage as these instruments move beyond crypto trading into wider payment and settlement uses.Issuers typically place the funds they receive into highly liquid reserve assets.
Those holdings often include short-term US Treasury securities, cash and Treasury-backed repurchase agreements. As a result, growth in token supply can channel additional buying into the market for US government paper.
Wilkins cited Bank for International Settlements research showing that the two largest dollar tokens, USDT and USDC, together held nearly $150 billion in Treasury bills at the end of 2025 and acquired about $33 billion of those securities during the year.
The same mechanism that supports Treasury demand can work in reverse. If redemptions surge, issuers may need to sell reserves quickly to meet withdrawals.
Wilkins warned that such sales could add pressure in Treasury markets already under strain, amplifying volatility rather than cushioning it.
Historical episodes of private money issuance, she argued, show that convertibility at par works in normal times only when backing is high-quality and liquid, and that crisis arrangements become essential when many holders demand cash simultaneously.
Wilkins placed the discussion in a longer historical context.
Private notes issued by banks in nineteenth-century Britain and the United States repeatedly ran into problems of uneven quality, limited liquidity in panics, and the need for a central institution to supply emergency support.
Modern stablecoins face similar tests, she said, especially when issuance, reserves, custody and users sit in different jurisdictions.
Recent US legislation has set reserve and disclosure standards, while the Bank of England is finalising a more demanding regime for any sterling tokens judged systemic.
The official also pointed to potential benefits.
Dollar tokens can settle around the clock and reduce some of the friction in correspondent banking, which could extend dollar use into markets where traditional payment rails remain slow or expensive.
That, in turn, could reinforce the currency’s international role even as other jurisdictions develop their own frameworks.
The speech framed stablecoins as more than a crypto market tool.
At sufficient scale they could become a structural source of demand for US dollars and Treasuries, while also creating a new channel through which stress in digital-asset markets might transmit to core government-debt markets.