Kazuo Ueda: Stablecoins impact finance, the Bank of Japan should adapt.
Bank of Japan Governor Kazuo Ueda warns that stablecoins are bypassing traditional banks, impacting monetary sovereignty and the financial landscape.
De-banking of cross-border settlements
With low costs and real-time advantages, stablecoins have become the preferred choice for small and medium-sized enterprises in cross-border transactions. In the first half of 2025, the trading volume of yen stablecoins doubled, with 30% used for import payments, diverting banks' international business. Some companies even use USDC for overseas salary payments, weakening the banking client base.
The yen's status is threatened.
Stablecoins accelerate the 'on-chain migration' of funds, impacting monetary sovereignty. From January to June 2025, Japan's M1 growth rate declined by 1.8% due to deposits shifting to stablecoins, while on-chain lending surged by 300%. The share of USDC in Japan's import settlements rose from 5% to 18%, weakening the yen's valuation position.
Regulation 'Bottom Line + Innovation'
The Bank of Japan legislates to require stablecoin issuers to have 100% fiat currency reserves but allows banks to issue their own stablecoins (such as Mitsubishi UFJ's yen version of JPM Coin). During turbulent times in the Middle East, traders use USDC to settle oil trades, avoiding the risk of yen depreciation, forcing the central bank to accelerate the research and development of the digital yen (CBDC).
Banks are forced to transform.
Stablecoins compel financial institutions to 'break through on-chain'. Mizuho Bank upgrades its blockchain payment system, and Nomura Securities launches a tokenized government bond platform, supporting USDC purchases of Japanese bonds. Ueda stated, 'Stablecoins are catalysts for the upgrade of traditional finance.'
Conclusion
The rise of stablecoins signifies a transfer of financial power to technical protocols. Governor Kazuo Ueda's response demonstrates the Bank of Japan's balance between innovation and stability—neither resisting change nor ignoring risks, while safeguarding monetary sovereignty and financial foundations.
