Denmark central bank flags stablecoin risks

• Danmarks Nationalbank has warned that wider stablecoin use could affect financial stability.
• Dollar stablecoins could transmit shocks from US markets into Denmark.
• The central bank wants central bank money to remain the main bank settlement asset.

Danmarks Nationalbank has warned that growing stablecoin use could eventually affect Denmark’s payments, financial stability and monetary policy.

Stablecoin adoption remains limited in Denmark, with no Danish krone-denominated stablecoin currently in circulation.

The central bank has warned that foreign-currency stablecoins could transmit financial shocks into Denmark as their domestic use expands.

Dollar-denominated stablecoins present a particular risk because turmoil could spread through the US financial system and global markets.

The central bank has also identified potential effects on financial markets, banks and monetary policy transmission if adoption increases substantially.

European banks and fintech firms are expanding stablecoin infrastructure under the EU’s Markets in Crypto-Assets framework, which could increase access across Denmark.

Danmarks Nationalbank has maintained that central bank money should remain the primary settlement asset between banks as tokenised financial markets develop.