The Bank for International Settlements’ General Manager, Pablo Hernandez de Cos, has dismissed stablecoins as a credible payment method at scale, advocating instead for tokenized deposits as a more robust solution for integrating blockchain technology into financial systems.
Speaking at the Jackson Hole Economic Policy Symposium in Wyoming, de Cos highlighted multiple structural deficiencies in stablecoins, which are designed to maintain a stable value but have faced growing scrutiny over financial stability and anti-money laundering risks, particularly outside the United States. He argued that stablecoins break the "singleness" of money by requiring users to incur costs when switching between products, while also lacking genuine interoperability across platforms.
De Cos further warned that the rise of dollar-pegged stablecoins could erode monetary sovereignty in some jurisdictions, a phenomenon he described as "digital dollarization." Such a shift could weaken the effectiveness of domestic monetary policy and tether local economic conditions more closely to external policy decisions. He also cautioned that stablecoins could increase bank funding costs as deposits migrate away from traditional lenders, potentially pushing up borrowing rates for households and businesses.
While acknowledging the potential for stablecoins to reduce sovereign borrowing costs, de Cos emphasized that tokenized deposits offer a more direct path to leveraging tokenization while preserving the foundational elements of the monetary system. However, he conceded that tokenized deposits still face unresolved challenges, including interoperability, governance, legal hurdles, and settlement inefficiencies.
The remarks come amid a divergence in regulatory perspectives on stablecoins. U.S. Treasury Secretary Scott Bessent has publicly supported stablecoins, framing them as a digital revolution that could bolster the dollar’s dominance as the world’s leading reserve currency and generate trillions of dollars in demand for U.S. Treasuries. De Cos’s comments, however, underscore the BIS’s preference for regulated, bank-issued alternatives to decentralized crypto assets.
