Stablecoins cannot become true currency, the bank for international settlements report points out.

The Bank for International Settlements (BIS) recently released its annual report, providing an in-depth analysis of the new generation of finance. The report indicates that stablecoins have failed to pass the three key tests required to become a pillar of the monetary system: singularity, resilience, and completeness, and therefore cannot be considered true currency.

The BIS believes that while stablecoins have some advantages, such as programmability, privacy protection, and user-friendly access methods, and may offer lower costs and faster transactions in areas like cross-border payments, they may also pose risks to the global financial system. These risks include undermining government monetary sovereignty and potentially facilitating illegal activities.

The report provides a detailed analysis of the reasons why stablecoins failed to pass three key tests:

1. Elasticity Testing: Taking a well-known stablecoin as an example, its issuance requires full prepayment, and this "cash-in-advance constraint" limits its elasticity.

2. Uniqueness Test: Stablecoins are typically issued by centralized entities, which may set different standards, making it impossible to guarantee uniform settlement guarantees. This results in different stablecoins potentially trading at different exchange rates, undermining the uniqueness of the currency.

3. Integrity Testing: There are differences in how stablecoin issuers implement regulations such as KYC and AML, making it difficult to effectively prevent financial crimes, and therefore there are significant flaws in promoting the integrity of the monetary system.

Despite a cautious stance on stablecoins, the BIS remains optimistic about the potential of tokenization. The report suggests that a tokenization platform centered around central bank reserves, commercial bank currencies, and government bonds could lay the foundation for future monetary and financial systems, bringing revolutionary innovations in areas such as cross-border payments and securities markets.

After the release of this report, the market's attitude towards stablecoin-related companies has changed significantly. The stock price of a well-known stablecoin issuer plummeted by more than 15% the day after the report was released, indicating that investors have certain concerns about the future development prospects of stablecoins.

Overall, the BIS report provides important references for regulators and financial institutions, helping them to formulate more informed policies and strategies in the rapidly changing financial technology environment.