The 2025 BIS Annual Economic Report analyses the expanding role of stablecoins and tokenisation in the global financial system, assessing associated risks, policy responses, and technological opportunities. It begins by highlighting the current AML/CFT burden: authorities must actively chase illicit stablecoin flows, while issuers and exchanges can only perform limited checks and rely on blockchain analytics for high‑profile cases, making stablecoins attractive to criminal actors. By contrast, traditional deposit‑based and e‑money systems place KYC and AML responsibilities on customer‑facing intermediaries, offering stronger controls. The report then examines the tension between stablecoin issuers’ profit motives and the need for fully backed, liquid reserves, outlining two business‑model extremes—high‑yield asset backing versus risk‑free central‑bank reserves. It documents rapid growth in cross‑border stablecoin volumes, especially during periods of high inflation, and warns that dollar‑denominated stablecoins can erode monetary sovereignty and crowd out safe‑asset investors, depressing Treasury yields. Empirical tables show how modest increases in stablecoin market capitalisation already shift T‑bill yields. Artificial intelligence is presented as a way to improve AML compliance: machine‑learning models can reduce false‑positive alerts and detect complex laundering patterns, while AI agents can act as “co‑pilots” to automate reporting tasks. The report advocates a technology‑neutral, “same‑activities‑same‑risk” regulatory stance, urging KYC for hosted wallets, travel‑rule compliance for unhosted wallets, and default‑blocking of addresses unless KYC is verified. The second half of the document turns to tokenisation as the logical next step for money. Tokenised central‑bank reserves, commercial‑bank deposits, and government securities can be combined on a unified ledger, enabling atomic settlement, programmable contracts, and contingent actions such as delivery‑versus‑payment. Various ledger architectures are mapped on a continuum from a single shared DLT to a network of coupled ledgers, each with trade‑offs between composability and data‑governance. The report illustrates tokenised domestic payments that collapse the three‑step debit‑credit‑settlement process into a single atomic transaction, preserving the two‑tier system’s singleness of money while eliminating bearer‑instrument risks. Next‑generation correspondent banking is envisioned on this unified ledger: payment instructions, AML screening, and settlement occur in a single smart‑contract transaction, with atomic settlement ensuring either full execution or none. Two implementation models are discussed – a centralized data repository versus federated learning for privacy‑preserving AML. Tokenisation of government bonds is examined, showing rising issuance, tighter bid‑ask spreads, and comparable issuance costs to conventional bonds, while noting regulatory and market‑experience hurdles. Tokenised repos could enable intraday collateral transfers, improving liquidity management. Finally, the report assesses how a fully tokenised system could transform monetary policy: central banks could issue tokenised reserves, run open‑market operations via smart contracts, and obtain real‑time balance‑sheet data, enhancing shock‑response speed. It acknowledges challenges such as interoperability, legacy system integration, and governance. The conclusion stresses that while stablecoins alone are unlikely to replace the monetary system, tokenisation offers a promising path, provided central banks lead, coordinate standards, and ensure robust governance and AML/CFT safeguards.
Topics
AML/CFT Regulatory Landscape for Stablecoins and Technological Mitigations
Examines the heavy AML/CFT burden on authorities in the stablecoin ecosystem, the limited compliance capacity of issuers and exchanges, and the BIS’s ‘same‑activities‑same‑risk’ policy stance that extends KYC and travel‑rule obligations to hosted and unhosted wallets. It also evaluates AI‑driven solutions—machine‑learning models that cut false‑positive alerts and autonomous agents that automate SAR filing—to strengthen detection and reporting.
Stablecoin Business‑Model Risks and Liquidity Stability
Analyzes the tension between profit‑driven asset‑backing strategies that employ credit‑risky securities and models that rely on fully risk‑free central‑bank reserves. The section assesses how each approach affects redemption liquidity under stress, the adequacy of reserve liquidity, and the systemic implications of insufficient backing.
Macro‑Financial Impacts of Stablecoin Expansion
Presents empirical evidence on how rapid growth in cross‑border, dollar‑denominated stablecoin volumes during inflationary periods can erode monetary sovereignty, crowd out safe‑asset investors, and depress U.S. Treasury yields. Quantitative tables illustrate yield shifts linked to modest increases in stablecoin market capitalisation.
Tokenisation Architecture and Unified Ledger Design
Maps the spectrum of ledger architectures—from a single shared DLT to networks of coupled or federated ledgers—highlighting trade‑offs between composability, data governance, and autonomy. The discussion sets the technical foundation for tokenising money, deposits, and securities on a unified ledger.
Tokenised Payments and Next‑Generation Correspondent Banking
Describes how tokenised domestic payments collapse the traditional three‑step debit‑credit‑settlement process into a single atomic transaction while preserving the two‑tier money system. Extends the concept to cross‑border correspondent banking, where payment instructions, AML screening, and settlement occur in one smart‑contract transaction, with optional federated‑learning approaches for privacy‑preserving AML.
Tokenised Securities and Market Efficiency
Evaluates the issuance of tokenised government bonds and sovereign‑linked assets, noting tighter bid‑ask spreads, comparable issuance costs to conventional bonds, and the potential of tokenised repos for intraday collateral transfers. It also outlines remaining regulatory and market‑experience hurdles.
Tokenised Monetary Policy and Central‑Bank Operations
Explores how fully tokenised systems could transform monetary policy: central banks issuing tokenised reserves, conducting open‑market operations via smart contracts, and gaining real‑time balance‑sheet visibility to accelerate shock response. The section acknowledges challenges such as interoperability, legacy integration, and governance.