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Stablecoins not credible for payments at scale, BIS chief says
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- DeepHorus
The Bank for International Settlements (BIS) has intensified its scrutiny of stablecoins, with General Manager Pablo Hernández de Cos declaring they are not credible for large-scale payments. De Cos, a potential successor to ECB President Christine Lagarde, argued that tokenized bank deposits present a more reliable alternative for harnessing tokenization while preserving the monetary system's core foundations. His remarks signal a continued institutional skepticism toward private digital currencies pegged to traditional assets.
The critique emerges as regulators globally develop frameworks for stablecoin adoption, yet significant inconsistencies persist. A new study from the BIS-linked Financial Stability Institute (FSI) reveals sharp differences in how major markets regulate stablecoin issuers. The report compared rules across the United States, European Union, United Kingdom, Hong Kong, and Singapore, highlighting a fragmented regulatory landscape.
De Cos acknowledged a potential upside, noting stablecoins could lower government borrowing costs—a view shared by U.S. Treasury Secretary Scott Bessent. However, he warned of significant downsides for consumers and the financial system. If deposits shift into stablecoins, banks might face higher funding costs, potentially passing increased borrowing rates to households and businesses.
The BIS chief also pointed to practical challenges, including limited interoperability between platforms and consistent application of anti-money laundering controls. Furthermore, the growing use of U.S. dollar-pegged stablecoins outside America could undermine monetary sovereignty and weaken domestic policy tools for other nations.
The FSI study underscores the regulatory divergence. It found that the U.S. and Singapore adopt relatively restrictive approaches toward non-bank issuers. Under the U.S. GENIUS Act, prohibited activities for payment stablecoin issuers include lending, staking, and proprietary trading.
Conversely, Hong Kong, the U.K., and the EU allow some additional activities with separate authorization or consent. A key finding across all five jurisdictions is that restrictions target the issuing entity specifically, not the entire corporate group. This allows other group members to engage in activities the stablecoin issuer cannot.
These developments suggest the BIS is advocating for a centralized, bank-centric path for digital currency innovation. The push for tokenized deposits over stablecoins reflects a desire to maintain traditional banking intermediation within a digital framework. The future of money appears to be a contested space between private innovation and institutional preservation.
