Swiss National Bank Warns of Stablecoin Risks to Monetary Policy and Interest Rates

The rapid development of digital payment technologies is drawing increasing attention from central banks as policymakers assess how new forms of private money could affect bank lending, interest rates and the transmission of monetary policy.

The Swiss National Bank (SNB) is among those raising concerns. The central bank has warned that large-scale stablecoins operating outside the traditional banking system could make it harder to influence borrowing costs and preserve the uniform value of the Swiss franc.

Speaking in Zurich on Wednesday, Petra Tschudin, a member of the SNB’s Governing Board, said the central bank was taking a cautious view of stablecoins because their growing use could complicate the transmission of monetary policy, according to Reuters.

Tschudin said policymakers need to examine these innovations closely, understand their potential consequences and determine appropriate regulatory frameworks. She warned that large stablecoins operating outside the existing two-tier monetary system, comprising the central bank and commercial banks, could create additional challenges for central banks in carrying out their core functions.

Stablecoins Put Central Bank Money in Focus

Stablecoins are digital assets designed to maintain a relatively stable value by being linked to an underlying asset such as a fiat currency or commodity.

Tschudin said the SNB supports financial innovation but is particularly concerned about the potential impact of stablecoins on central bank money, which provides risk-free liquidity used by commercial banks to settle transactions between themselves.

The Swiss National Bank stablecoins concern is that a stablecoin operating outside the central bank framework may not necessarily maintain the same economic relationship with the Swiss franc as traditional central bank money.

That could challenge the principle that one unit of currency should maintain the same value across different forms and uses within the monetary system.

Could Stablecoins Drain Bank Deposits?

A more direct concern involves what could happen if households and businesses shift part of their money from commercial bank deposits into stablecoins.

According to Tschudin, such a shift could reduce the pool of deposits available to banks for lending, potentially affecting both the availability and cost of credit.

Commercial banks play a central role in transmitting monetary policy through lending. If deposits increasingly move into stablecoins outside the banking system, changes in the central bank's interest rates could have a weaker effect on borrowing costs across the wider economy.

That could ultimately affect the volume and pricing of credit and make the transmission of monetary policy more difficult.

Stablecoin Growth Raises Broader Regulatory Questions

The stablecoins continue to expand even as activity in some major cryptocurrency markets slows. Their use across blockchain networks has grown, with major issuers such as Tether and Circle accounting for a significant share of the market.

At the same time, emerging regulatory frameworks are reshaping the stablecoin sector. New rules and proposals, including the U.S. GENIUS Act framework, are placing greater emphasis on reserve requirements and issuer standards, while stablecoins are also being tested for payments and settlement in traditional financial markets.

That expansion is changing the policy debate. Stablecoins are no longer viewed solely through the lens of cryptocurrency markets; their growing use increasingly intersects with the functioning of the banking system and the transmission of monetary policy.

The central question for policymakers is therefore becoming how stablecoins should interact with commercial bank deposits and central bank money if they begin replacing a meaningful share of the liquidity that banks use to support lending.

For central banks, the challenge extends beyond ensuring that stablecoins themselves remain stable. It also involves preserving the effectiveness of monetary policy as money increasingly moves through new digital channels.