Stablecoins do not provide a reliable mechanism for large-scale payments, Bank for International Settlements Managing Director Pablo Hernandez de Cos said on Friday at the Jackson Hole Economic Policy Symposium in Wyoming.
Speaking alongside U.S. Treasury Secretary Scott Bessent, Hernandez de Cos argued that tokenized bank deposits represent a more robust foundation for integrating blockchain technology into mainstream finance. Tokenized deposits could handle routine transactions while stablecoins remain confined to niche applications, he suggested. The BIS chief also highlighted structural risks posed by stablecoins, including higher funding costs for traditional banks as deposits migrate to digital assets, potentially pushing up borrowing costs for retail and corporate clients.
Hernandez de Cos further contended that stablecoins undermine monetary sovereignty by facilitating dollarization outside U.S. borders. Widespread adoption of dollar-pegged stablecoins by non-U.S. borrowers could weaken domestic monetary policy effectiveness and expose local economies to shifts in U.S. foreign policy, he warned. The BIS managing director also cited interoperability gaps and money laundering risks as persistent challenges in stablecoin ecosystems, noting that inconsistent controls across platforms exacerbate these issues.
In contrast, Bessent defended stablecoins as a transformative force for the U.S. dollar. He described them as a digital revolution that could bolster the dollar’s reserve currency status and generate demand for trillions of dollars in additional U.S. Treasury issuance. The Treasury secretary framed stablecoins as a tool to reinforce America’s financial leadership while dismissing concerns about systemic risks.
Hernandez de Cos acknowledged that tokenized deposits offer a more direct path to leveraging tokenization within the existing monetary framework. However, he cautioned that these instruments still face hurdles, including governance disputes, legal ambiguities, and settlement inefficiencies. The BIS chief’s remarks underscore a widening debate over the role of private digital assets in global finance, with central banks increasingly weighing alternatives that preserve monetary stability.
