The prospect of using stablecoins for large-scale financial settlement faces significant hurdles due to safety concerns in their current form. Wholesale markets require settlement assets that meet rigorous regulatory standards, which today's stablecoin arrangements fail to satisfy, particularly regarding credit quality and liquidity immediacy.

Financial market infrastructures serving the global banking system must adhere to 24 principles established after the 2008 crisis, mandating settlement in the highest-quality money. Institutions like New York-based CLS Bank, which settles $8tn in foreign exchange transactions daily, achieve this through risk-mitigating measures that current stablecoins lack.

The path forward may involve tokenized central bank money or redesigned private sector stablecoins confined to wholesale settlement among regulated institutions. However, the fundamental business model mismatch between current stablecoin issuers and established FMIs suggests substantial regulatory and structural changes would be needed before stablecoins could function as viable wholesale settlement assets.