BIS Chief Says Stablecoins Are Not Credible for Large-Scale Payments

Highlights:

• BIS chief Pablo Hernández de Cos says stablecoins are not credible enough for large-scale everyday payments.
• He prefers tokenized bank deposits for mainstream payments while keeping stablecoins for more limited financial uses.
• De Cos also warned dollar-backed stablecoins could pressure local currencies and complicate monetary policy control.

Bank for International Settlements (BIS) chief Pablo Hernández de Cos has questioned whether stablecoins can work as a reliable payment method on a large scale. Instead, he believes tokenized bank deposits offer a stronger option for everyday digital payments.

De Cos made the comments on August 28 at the U.S. Federal Reserve’s Jackson Hole Economic Policy Symposium in Wyoming, according to Reuters. The BIS general manager said stablecoins and tokenized deposits could exist together. However, he wants tokenized deposits to handle most daily payments while stablecoins serve more limited uses.

BIS Chief: Stablecoins Are Not a Credible Means of Payment at Scale

According to Reuters, Bank for International Settlements (BIS) General Manager Pablo Hernández de Cos said at the Jackson Hole Economic Policy Symposium that stablecoins are not a credible means of payment at… pic.twitter.com/peuR9CY0Z7

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BIS Chief Raises Concerns Over Stablecoin Payments

De Cos pointed to several problems that could make stablecoins difficult to use as everyday money. One concern is interoperability. Stablecoins can operate across different blockchain networks, but moving assets between those networks is not always smooth. Users may also need to exchange one stablecoin for another, which can add costs and affect the value received.

De Cos also raised concerns about anti-money laundering controls. Many stablecoin transactions take place through self-custody wallets. These wallets allow users to control their own crypto without relying on a bank or centralized exchange. However, that structure can make consistent identity and compliance checks harder to apply.

The BIS has also warned about financial risks if stablecoin adoption grows rapidly. Stablecoin issuers often hold government debt or bank deposits as reserves. Large shifts of money from traditional bank deposits into stablecoins could raise funding costs for banks and eventually make borrowing more expensive.

Dollar Stablecoins Could Pressure Local Currencies

De Cos also focused on the growing use of U.S. dollar-backed stablecoins outside the United States. “The growing adoption of dollar-pegged stablecoins has also raised concerns in some jurisdictions about monetary sovereignty and the potential for digital dollarization,” he said.

If people increasingly use dollar stablecoins instead of their local currency, central banks could have less control over domestic financial conditions. Their interest-rate decisions could also become less effective.

However, U.S. Treasury Secretary Scott Bessent has taken a more positive view of stablecoins. He has argued that wider adoption could strengthen the U.S. dollar’s role around the world and create more demand for U.S. Treasury securities. De Cos acknowledged that stronger demand for government debt could lower sovereign borrowing costs. Still, he warned that the shift could come with higher funding costs elsewhere in the financial system.

BIS Favors Tokenized Bank Deposits

De Cos believes tokenized deposits provide a better foundation for digital payments. Tokenized deposits are digital versions of money held in regulated bank accounts. They can use blockchain or similar technology while remaining linked to the existing banking and central bank system. “Tokenised deposits offer a more direct path to harness tokenisation while preserving the monetary system’s foundations,” de Cos said.

Still, the BIS chief said tokenized deposits also face challenges. Banks and regulators need to improve interoperability between platforms and address governance, legal, settlement, and cybersecurity issues before the technology can operate widely. For now, de Cos sees room for both technologies. However, he wants regulated tokenized deposits to handle mainstream payments while stablecoins remain focused on more specialized areas of digital finance.

The latest comments follow an earlier BIS warning in June. In its Annual Economic Report, the BIS described stablecoins as “run-prone instruments outside the bank perimeter” and warned that their growth could create new risks for the global financial system. The institution also called for stronger oversight as stablecoins and other digital assets expand outside traditional banking rules.

JUST IN: BIS flags stablecoins lack true monetary attributes and warns of “stablecoin dollarization” risk for emerging markets. If the critique holds, regulatory scrutiny and demand for on-chain alternatives could rise. $BTC $ETH $USDT $USDC pic.twitter.com/A7Tq6uBJAb

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