Until criticizes stable coins and describes them as unsuitable for modern currency systems

Stable coins fail where it is most important, says the bank for international payment compensation (BIZ), which has sharply criticized this investment class in its recent annual report.

Stable coins are by no means modern money, but have defects in essential basic features such as trust, flexibility and system integrity.

The biz argumentedthat stable coins work more like speculative financial investments than currencies. Since they are issued by private companies and are not generally accepted at a fixed value, they violate the concept of “uniformity” of money – the idea that one unit always has the same value as another.

Due to their structure, users have to advance the full value before the issue, so that there is no scope for a monetary expansion in crisis times – a blatant contrast to the liquidity intake by central banks. In addition, the biz indicates the risks associated with public blockchains and unregulated wallets and warns of money laundering and illegal flows.

Despite its popularity in cross -border transactions, the BIZ recommends limiting the use of stable coins to strictly regulated areas. She emphasizes that the teachings from past currency crises in the zeal to digitize the financial system should not be forgotten.

Interestingly, the report was much more positive about the tokenization and described it as a promising instrument for improvement – and not for replacement – the existing financial architecture.

The markets reacted promptly. The shares of Circle (CRCL), the issuer of the StableCoin USDC, collapsed by over 15% after publication.