The Bank for International Settlements (BIS), a global central bank alliance, has criticized stablecoins, stating in its latest research report on November 8 that they are "not a secure store of value." The BIS outlined its concerns, noting that fiat-backed stablecoins maintained their peg ratios only 94% of the time from January 2019 to September 2023, falling short of the 100% often promised in project white papers. Crypto-backed stablecoins and commodity-backed stablecoins showed even lower peg ratios, at 77% and 50%, respectively.
The BIS emphasized that only seven fiat-backed stablecoins managed to maintain deviations from their pegs below 1% for more than 97% of their lifetimes, with Tether (USDT) and USD Coin (USDC) meeting this standard. However, the BIS expressed concern about other stablecoins, noting that many issuers did not allow independent certified accountants to inspect their reserves. Even when inspections occurred, reserve reporting often did not adhere to common reporting standards. The BIS raised questions about the potential impact on financial stability if these stablecoins could not be exchanged for users' stablecoins at face value on demand.
In March, Circle's USDC briefly deviated by more than 10% from its 1:1 peg to the U.S. dollar after its reserves were temporarily stranded at the failed Silicon Valley Bank. The stablecoin has since returned to its face value. Additionally, last May, the $40 billion Terra ecosystem experienced a collapse when the support mechanism for its stablecoin Terra USD (UST) failed, causing a brief decoupling of USDT. However, USDT also returned to its face value.
