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A senior Bank of England policymaker has made the case that stablecoins are now a structural support for the U.S. dollar and U.S. Treasury demand, and a structural risk to the market that backs them, in the same breath. Carolyn Wilkins, external member of the BoE's Financial Policy Committee, said in a September 15 speech at Queen's University Belfast that dollar-denominated stablecoins reinforce global dollar dominance and drive demand for Treasurys, with issuers' reserve purchases pressuring short-term yields, but warned that sudden token redemptions could force fire sales of Treasury bills during precisely the moments of sovereign-debt stress when markets can least absorb them. The scale behind her argument: global stablecoins reached roughly $300 billion in circulation by mid-2026, up from under $5 billion in early 2020, USD-backed tokens represent about 98% of the total, and Tether and Circle alone held nearly $150 billion in U.S. Treasury bills at the end of 2025, having acquired about $33 billion in net T-bills during that year.
Wilkins, a former senior deputy governor at the Bank of Canada, framed the dollar's grip in adoption terms: stablecoins possess a "considerable first-mover advantage" that extends digital dollarization into markets where correspondent banking never reached.
Why Stablecoins Boost Dollar and Treasury Demand
The mechanism Wilkins described is the one the industry has been quietly monetizing for three years. Issuers invest mint proceeds into reserves, T-bills, cash, repo, creating a standing bid for short-dated U.S. government paper that grows with token circulation, and the remittance economics make the demand self-propagating: global remittance costs averaged 6.4% in 2024 and reached 8.5% in Sub-Saharan Africa, so a dollar stablecoin in a mobile wallet undercuts the banking rails it replaces, and every new wallet is a new dollar liability backed by a new slice of Treasury reserve. That is the demand side of the same coin the banking industry has been fighting over, and it explains why the GENIUS Act's 1:1 liquid backing mandate was written the way it was: the U.S. chose to harness the reserve demand rather than suppress the tokens, converting a crypto product into a Treasury distribution channel. The euro context in Wilkins' data makes the point sharper, Circle's EURC passed €400 million in circulation in August against a euro stablecoin supply of about €650 million, roughly half of one percent of the dollar stablecoin complex, meaning the digital-currency future, as currently constituted, is substantially a dollar future.
The Run Risk Nobody Has Fully Priced
The second half of the speech is the part regulators will cite for years. Stablecoin issuers have no Federal Reserve discount-window access, so a mass redemption event forces them to liquidate T-bills directly into the market, outside banking hours, and Wilkins compared the potential feedback loop, falling token prices triggering redemptions triggering reserve sales triggering falling collateral values, to the UK's 2022 liability-driven investment crisis, when pension-fund margin spirals forced the Bank of England into emergency gilt purchases. The structural irony deserves its own sentence: the regulatory mandate that makes stablecoins safe, 1:1 liquid T-bill backing, makes them systemically coupled to the safest asset market on earth, so a $300 billion stablecoin market is now a leveraged claim on T-bill liquidity that did not exist in the LDI-era gilt market, and Tether's $1.5 billion Q2 operating profit shows how profitable that coupling is, which is exactly why it will keep growing. The counterweights are real: OCC rules due in November with an effective date around March 2027, annual audits for issuers above $50 billion, the UK's own systemic-sterling framework completing late 2026, and the same global standards push from the BIS that has treated stablecoin runs as a G20 issue all year. Circle's 2023 exposure, $3.3 billion trapped at Silicon Valley Bank during its failure, remains the sector's one live demonstration that the reserve layer is only as safe as the banking system holding it.
What to Watch
Watch the OCC's November rules for whether U.S. issuers get any standing liquidity facility, which would be the single biggest change to the run-risk math; watch the BoE's sterling framework, whose late-2026 completion will test whether a non-dollar stablecoin can meet the standards Wilkins describes; and watch the next market stress event, because Wilkins' speech is best read as central banks putting issuers on notice before the test arrives. Stablecoins export the dollar and fund the Treasury every day. The bill for that service comes due only when everyone redeems at once.
