- Amundi fears stablecoins may threaten financial stability and global payment systems.
- The GENIUS Act could accelerate dollar dominance and weaken monetary sovereignty.
- Stablecoins may act as quasi-banks, raising systemic risks in non-U.S. financial markets.
Europe’s largest asset manager, Amundi, has issued a warning about the global impact of a surge in U.S.-backed stablecoins. This follows the recent approval of the GENIUS Act in the U.S Senate. The bill aims to institute a formal regulatory framework for stablecoins pegged to the U.S. Dollar. It is expected to pass through the House of Representatives committee and be signed into law by President Donald Trump.
Amundi’s Chief Investment Officer, Vincent Mortier, cautioned that increased adoption of dollar-backed tokens could disrupt cross-border payment systems. Mortier noted that these coins might function as alternatives to traditional currencies. This could weaken the financial sovereignty of several countries. Currently, over 98% of stablecoins are tied to the U.S. dollar.
Stablecoin Expansion and Dollarization Risks
The GENIUS Act requires U.S. stablecoins to remain pegged to the dollar. Analysts expect this to drive further demand for U.S. Treasury bonds. JPMorgan estimates that stablecoins in circulation could double to $500 billion in the coming years. Some forecasts suggest the total value could reach $2 trillion. This could provide temporary relief for the U.S. budget deficit by increasing demand for bonds.
However, critics argue that global uptake of dollar-based coins could lead to large-scale dollarization. This process may bypass traditional banking systems. Italy’s finance minister, Giancarlo Giorgetti, raised similar concerns earlier this year. He stated that such access to dollars could threaten national monetary control. The Bank for International Settlements also warned about the dangers of capital flight and transparency issues associated with stablecoin use.
The Role of U.S. Policy and Emerging CBDCs
The GENIUS Act follows broader activity in the U.S. to stay at the forefront in digital currency regulation. The U.S. is moving toward adopting stablecoins, whereas other parts of the world are making progress on central bank digital currencies (CBDCs). Europe, China, and other economies are working on the CBDC to overcome the supremacy of the private digital tokens. Such concurring advancements imply opposing policies in the digital financial front.
If stablecoins become more dominant, they may pose a challenge to emerging CBDCs. Mortier explained that they could act as “quasi-banks,” with users treating them like deposits. This would give private firms control over large monetary flows. Many stablecoin transactions already take place outside U.S. borders, raising regulatory and oversight concerns for other nations.
Financial Stability and Global Trade Implications
New forms of challenge to financial stability may emerge with the emergence of stablecoins. As Mortier observed, mass adoption can create systemic risks if people lose access to their digital funds. Use of tokens as a method of payment may also displace local banking. Monetary policy may lose its grip as coins are getting absorbed more in international commerce.
Related: Swiss AMINA Bank Launches RLUSD Stablecoin Service for Institutions
With most of the activity occurring abroad, regulators outside the U.S. are facing growing challenges. European and emerging market officials fear a loss of control over exchange rates and capital flows. The dollar might become stronger globally, and this was indeed the case, despite the objective to diversify beyond the monetary supremacy of the United States. Depending on these shifts, it is possible to alter the global trade and finance management.
Geopolitical and Market Dynamics
The stablecoin debate is not limited to financial risks. It also has geopolitical implications. U.S. leadership in the digital asset space could shift the balance of monetary power. Countries without a digital alternative to the dollar may face increasing dependence on U.S.-based platforms. This could impact trade agreements and financial partnerships in the years ahead.
Private companies behind these coins may gain influence over cross-border payments. This could further reduce the control of public monetary institutions. The warning issued by Amundi further increases the voices calling for global coordination. In the absence of a consistent policy, the financial environment will be atomized into disorder and uncertainty.
