Fnality argues central bank money must anchor wholesale stablecoin settlement

Fnality has published a position piece arguing that stablecoins, despite surpassing $300 billion in total supply and proving their utility in payments, are not structurally equivalent to central bank money when it comes to large-value wholesale settlement. The piece contends that the financial system’s core infrastructure requires settlement assets that carry no private credit risk, no collateral-originator risk, and no custodian risk, none of which can be fully eliminated when the settlement asset is a privately issued stablecoin backed by reserves that must be marked to market and may need to be liquidated under stress.

The argument turns on three requirements Fnality identifies as non-negotiable for wholesale markets: finality, settlement-asset quality, and interoperability. Stablecoins can satisfy certain dimensions of these, but the piece highlights a structural constraint: a stablecoin holder’s claim is either on the issuer directly, where reserves are not ring-fenced, or on a pool of assets, where they are. Neither is equivalent to a claim on a central bank. A Bank for International Settlements (BIS) study of 68 stablecoins cited in the piece found that none maintained its peg absolutely across all scenarios, which the piece uses to draw a distinction between a promise of par and actual settlement at par.

The practical implication Fnality draws is not that stablecoins should be displaced but that they should be understood as one layer in a tiered architecture. Commercial bank money and central bank money have established roles that digital rails can extend rather than replace. Global systemically important banks (GSIBs), the piece notes, cannot accumulate settlement exposures of the kind that stablecoin-denominated wholesale flows could generate indefinitely. The likelier read of Fnality’s framing is that wholesale infrastructure built on central bank money, its own positioning in that market, sits alongside rather than competes with stablecoin payment rails built for other use cases.