Key takeaways:

• Stablecoins' linkages with the traditional financial system are growing, which raises policy challenges ranging from preserving financial integrity to mitigating financial stability risks.
• Broader use of foreign currency-denominated stablecoins could raise concerns about monetary sovereignty and, in some jurisdictions, erode the effectiveness of existing foreign exchange regulations.
• The principle of "same risks, same regulation" faces limitations in the context of stablecoins, highlighting the need for tailored regulatory approaches that address the nature and specific features of stablecoins.

A special chapter of the BIS's Annual Economic Report 2025 builds on the principles of the unified ledger by laying out a more detailed blueprint for how this concept can combine the "trilogy" of tokenised central bank reserves, tokenised commercial bank money and tokenised government bonds, while maintaining the core elements of a sound monetary system based on trust in central bank money.

The paper analyses how retail central bank digital currencies (CBDC) and fast payment systems (FPS) compare with each other and why some jurisdictions have opted for a retail CBDC, while others have chosen to introduce an FPS or both. 

The paper also compares emerging challenges and risks related to retail CBDCs and FPS.