Stablecoins need emergency liquidity backstops to scale safely
Bank of England policymaker Carolyn Wilkins stated that private stablecoins require robust crisis liquidity and regulatory backstops to operate safely at scale. Speaking in Belfast on September 15, 2026, she warned that technology alone cannot secure currency dominance.
From crypto niche to Treasury buyer
Stablecoins in circulation reached roughly $300 billion by mid-2026, up from less than $5 billion in 2020, with 98 percent denominated in US dollars.
USDT and USDC held almost $150 billion in Treasury bills at the end of 2025, recording net purchases of $33 billion that year.
Wilkins highlighted that while the US GENIUS Act of July 2025 mandates one-to-one liquid reserves, reserve assets can become illiquid during systemic panics.
Recalling the March 2023 USDC de-peg caused by $3.3 billion stranded at Silicon Valley Bank, Wilkins noted that the Bank of England's forthcoming regime for systemic sterling stablecoins will impose stricter liquidity contingency planning and consider central bank access.
Lessons from sterling and free banking
Drawing on nineteenth-century banking panics and the sterling area, Wilkins argued that private money systems repeatedly failed without parity clearing and lender-of-last-resort support.
While the US dollar remains dominant—accounting for 89.2 percent of foreign exchange transactions in April 2025 despite its share of global foreign exchange reserves slipping to 57 percent in 2026—technology cannot replace underlying fundamentals.
As sterling demonstrated over decades, network effects ultimately erode without fiscal credibility and deep liquidity backstops.
Code cannot replace credibility
Wilkins delivers a timely reality check to policymakers treating stablecoins as geopolitical tools.
Private reserve backing alone cannot stop classic bank runs once wholesale funding freezes.
By demanding explicit liquidity backstops, the Bank of England rightly puts systemic resilience ahead of fintech cheerleading.
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