BIS Chief Says Stablecoins Fall Short for Payments at Scale
BIS chief Pablo Hernández de Cos says stablecoins could reshape bank funding and Treasury demand but remain ill-suited to everyday payments at scale.
Summary:
- BIS General Manager Pablo Hernández de Cos favors tokenized bank deposits for mainstream payments.
- Stablecoin growth could boost demand for U.S. Treasuries while simultaneously making bank funding more expensive.
- Public blockchains still fragment liquidity across networks and complicate consistent financial-crime controls.
- The policy divide is increasingly geographic: dollar stablecoins can strengthen U.S. monetary reach while weakening it elsewhere.
Stablecoins are not a credible means of payment at scale in their current form, Bank for International Settlements General Manager Pablo Hernández de Cos said at the Jackson Hole Economic Symposium on August 28. His preferred alternative is not a retreat from blockchain technology but a different form of digital money: tokenized commercial bank deposits that retain access to central bank settlement while adding programmability.
The BIS objection starts with how money settles
Hernández de Cos framed the choice around three properties: singleness, interoperability and integrity.
The first is particularly important. Money issued by different commercial banks trades at the same face value because banks ultimately settle obligations using central bank reserves. Users do not have to consider whether $100 held at one bank is worth less than $100 at another.
Stablecoins lack that common settlement mechanism.
USDT and USDC may both target $1, for example, but converting between them can involve a market transaction whose price depends on liquidity and market conditions. Stablecoins issued on different blockchains introduce another layer of fragmentation.
The BIS Annual Economic Report 2026 highlights the same problem at the network level. A stablecoin issued on Ethereum and a token carrying the same name on Solana reside on separate ledgers that do not communicate natively. Bridges and other infrastructure can connect them, but the tokens themselves do not share the universal settlement layer that commercial banks obtain from central bank money.
Tokenized deposits retain that layer. The customer’s claim remains against a regulated commercial bank even when represented as a programmable token, while interbank obligations can continue to settle through central bank reserves.
A $1 shift from deposits has consequences beyond crypto
The more immediate economic question is what happens if stablecoins capture a meaningful share of money currently sitting in bank accounts.
For a user, exchanging a bank deposit for a stablecoin can look like little more than moving dollars from one digital format into another. The balance-sheet effect is different.
Deposits provide banks with a major source of funding for loans. If stablecoin issuers attract those balances, commercial banks may have to replace them with wholesale borrowing or compete more aggressively for deposits.
Either option can increase funding costs. Banks can then pass part of that increase to households and companies through more expensive mortgages, business loans and other credit products.
Hernández de Cos paired that potential cost with a benefit for the U.S. government. Stablecoin issuers need reserve assets to back their tokens, and short-term U.S. government securities have become an important part of those reserves. Greater stablecoin adoption could therefore generate additional Treasury demand and reduce sovereign borrowing costs.
The result is an unusual redistribution of funding:
This is where the stablecoin debate moves beyond crypto regulation. Large-scale adoption could change who receives cheap funding inside the dollar system, potentially directing more liquidity toward government securities while reducing the deposit base available to banks.
Public blockchains create a different compliance problem
The BIS’s financial-integrity concern centers less on the digital token itself than on the infrastructure through which it can circulate.
Banks know their depositors and operate under established customer-identification and transaction-monitoring requirements. A stablecoin can leave a regulated exchange and move between self-custodied wallets without another regulated intermediary appearing at each stage.
That does not make every self-custodied transaction illicit. It does make consistent application of anti-money laundering controls harder when neither side of a transfer needs to be a supervised financial institution.
READ MORE: Revolut Takes Euro Stablecoin Into Its Global Currency Push
Interoperability compounds the issue. Stablecoins now circulate across Ethereum, Tron, Solana, BNB Chain, Base, Arbitrum and other networks. The BIS’s 2026 report notes that these blockchains do not share a common method for identifying accounts across chains, while assets can remain siloed unless additional infrastructure connects them.
Scaling stablecoin payments therefore requires more than processing additional transactions. It requires common standards for moving value and regulatory information across networks that were designed to operate independently.
The U.S. has a different incentive from countries facing dollarization
The same stablecoin can produce opposite policy effects depending on where it is used.
For Washington, global adoption of dollar-backed stablecoins can extend demand for both the dollar and Treasury securities. Reuters noted that Treasury Secretary Scott Bessent has backed stablecoins partly for their potential to reinforce the dollar’s international role.
For another central bank, the calculation can run in reverse.
A consumer in a country with a volatile domestic currency no longer needs a U.S. bank account to hold a transferable dollar-linked asset. A smartphone and access to a stablecoin can provide an alternative store of value and payment instrument.
If that behavior becomes widespread, local interest-rate decisions affect a smaller portion of household and corporate money. The domestic central bank then has less influence over financial conditions, particularly in economies already vulnerable to currency substitution.
This creates a policy asymmetry: the same mechanism that can extend dollar influence can dilute monetary sovereignty elsewhere.
That tension helps explain why stablecoin regulation is unlikely to converge entirely around the U.S. model even as dollar-backed tokens expand internationally.
Tokenized deposits still have to prove they can connect
The BIS preference does not amount to an endorsement of today’s tokenized-deposit infrastructure as a finished replacement.
Banks could build separate permissioned ledgers that recreate many of the silos tokenization is supposed to remove. Cross-border use raises additional questions about which legal framework governs a token, when settlement becomes final and how platforms operated by different institutions communicate.
The BIS nevertheless sees a route to solving those problems without creating a parallel form of money.
Its 2026 work on the next-generation monetary system proposes combining tokenized central bank reserves, commercial bank money and other financial assets on programmable infrastructure. The objective is to preserve the two-tier monetary system while allowing transactions and settlement to become more automated.
That approach is already moving beyond theory. BIS initiatives including Project Agorá are exploring how tokenized commercial bank deposits and wholesale central bank money could operate together in cross-border payments.
Hernández de Cos left room for stablecoins within that future, particularly for specialized uses. His Jackson Hole argument instead draws the boundary around scale: stablecoins may coexist with bank money, but the BIS does not see them as the most credible foundation for the bulk of everyday payments.
The next test will be practical rather than rhetorical. Tokenized bank deposits must demonstrate that separate institutions and jurisdictions can make their platforms interoperable without sacrificing the programmability that makes tokenization useful. If they cannot, stablecoins will retain one of their strongest advantages: they already move globally on infrastructure that users can access without waiting for banks to build a common network.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Stefanov
Reporter at CoinsPress
Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
