Stablecoins and the battle for monetary influence

For decades, the U.S. dollar has been the backbone of global finance. Today, its newest champion may not be a central bank or bond market, but in fact a piece of code. With the stablecoin market now surpassing $300 billion, these digital assets are reshaping how value moves across borders. The question is no longer whether stablecoins matter, but what kind of financial order they will help create or impact. Could they be a threat to the dollar’s dominance, or its most powerful new extension?

A new engine behind USD dominance

At the moment, the answer leans toward reinforcement, not replacement. Nearly all stablecoins are USD-pegged. This expansion of digital liquidity effectively extends the reach of the dollar, allowing it to circulate beyond the traditional banking system. In doing so, stablecoins are digitising the dollar’s infrastructure and embedding it deeper into global trade, remittance, and financial markets.

Regulatory developments, such as the GENIUS Act, have accelerated this trend. By requiring stablecoins to be backed by safe, liquid assets, such as Treasury bills, the U.S. is ensuring that these “digital dollars” are as credible as their traditional counterparts. Each stablecoin transaction strengthens demand for U.S. assets and reinforces confidence in the dollar.

In that sense, stablecoins represent a subtle but profound shift. They allow the dollar to operate 24/7, across jurisdictions, in programmable form, without relying on correspondent banking networks. Every time a stablecoin is used for settlement or collateral, it extends the dollar’s network effect. Far from undermining the system, these tokens are creating a new layer of global infrastructure built upon the same foundation of trust, liquidity, and accessibility that has long underpinned the dollar’s dominance.

Reaching an institution-ready, borderless financial system

The most transformative force behind this shift is the acceleration of institutional participation. Banks, corporates, and payment providers are no longer passive observers. Many are experimenting with issuing their own regulated stablecoins or tokenised deposits. The motivation is clear: to modernise financial infrastructure, reduce friction and deliver services that meet demand for instant, borderless money movement.

Institutional clients increasingly want to understand how traditional FX markets and digital assets can coexist within a unified liquidity framework. Stablecoins sit at the centre of this evolution. They offer the familiarity of fiat with the speed and programmability of blockchain, linking established markets and emerging digital ecosystems.

In 2024, stablecoin transfer volumes reached $27.6 trillion, surpassing the combined volume of Visa ($15.7 trillion) and Mastercard ($9.8 trillion) for the same period. To outpace the world’s biggest card networks on process volume is no small feat, which is why I believe that stablecoins will be so embedded in the future of our financial fabric that we won’t even realise they are being used on the very same rails. 

These developments reframe the debate around dollar dominance. Rather than viewing stablecoins as a threat, we should recognise them as catalysts for efficiency and inclusion. They are re-platforming global finance, helping to link previously siloed markets and enabling round-the-clock access to liquidity. Modernisation is here, and the mechanism will be a subtle, yet deep, replacement of the existing payment infrastructure.

The European opportunity

For other currencies, especially the Euro, the path to adoption is more tangible today than ever. While Markets in Crypto-Assets Regulation has provided a clear legal framework and supervision for euro-backed stablecoins, we are just now seeing the next step: institutional mobilisation. Just earlier this year, nine major European banks, including ING, UniCredit, CaixaBank, and others, formed a consortium to launch a MiCA-compliant euro-denominated stablecoin, aiming for issuance in the second half of 2026.

This marks a significant shift: Europe’s largest financial institutions are no longer standing on the sidelines but are in fact building the rails for digital money. Still, the scale gap cannot be ignored. The euro-stablecoin market currently sits below US$1 billion, compared to more than US$300 billion in USD-pegged tokens. Integration will be the real catalyst for growth. Euro-backed stablecoins can only scale once they are fully embedded into banks’ core treasury, custody, and settlement processes, and that will still take time.

The road ahead

Ultimately, the way jurisdictions design and regulate stablecoins will determine who sets the standards for the next phase of global finance. If the U.S. continues to move quickly to institutionalise stablecoin issuance under clear federal oversight, it could solidify the dollar’s leadership for another generation, but this time, through digital rails.

That said, competition is intensifying. From Europe’s bank-backed euro projects to Asia’s central-bank-linked initiatives, rival digital currencies are emerging that seek to match the speed, scale, and trust of dollar-denominated tokens. This new era of currency competition won’t be defined by one currency displacing another, but by a convergence of fiat and digital standards into a single, interoperable system.