JACKSON HOLE (Web Desk) - The head of the Bank for International Settlements (BIS), Pablo Hernandez de Cos, has said stablecoins are not a credible means of payment on a large scale and argued that tokenised bank deposits offer a stronger foundation for the future of digital finance.
Speaking at the US Federal Reserve’s Jackson Hole Economic Policy Symposium in Wyoming, de Cos said stablecoins and tokenised deposits could coexist, but day-to-day transactions should rely mainly on tokenised deposits, while stablecoins should serve more specialised purposes.
Stablecoins are crypto assets designed to maintain a stable value, often by being linked to traditional currencies such as the US dollar. Their rapid growth has raised concerns among regulators over financial stability, money laundering and the increasing influence of dollar-based digital assets.
De Cos said stablecoins could lower government borrowing costs by boosting demand for sovereign debt, but warned they may also increase funding costs for banks and ultimately lead to higher borrowing costs for consumers.
He argued that stablecoins weaken the “singleness” of money because users cannot move seamlessly between different products without incurring costs. He also highlighted concerns over limited interoperability among stablecoin platforms and difficulties in applying consistent anti-money laundering controls.
The BIS chief further warned that the growing use of dollar-pegged stablecoins outside the United States could undermine monetary sovereignty in some countries, weaken domestic monetary policy and increase dependence on external financial conditions.
De Cos said tokenised deposits provide a more direct way to benefit from financial tokenisation while preserving the foundations of the existing monetary system. However, he added that tokenised deposits still face challenges related to interoperability, governance, settlement mechanisms and legal frameworks.
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