Against the backdrop of the rapid growth of the "stablecoin" market, the head of the Bank for International Settlements (BIS), Pablo Hernández de Cos, presented a harsh assessment of their prospects. During the Federal Reserve symposium in Jackson Hole, he stated that stablecoins in their current form cannot become a reliable means of payment on the scale of the entire economy. In his words, the foundation of the digital financial system should be not them at all, but tokenized bank deposits.
Key limitations of "stablecoins"
De Cos highlighted a number of systemic problems hindering the integration of stablecoins into everyday payments. Among them are liquidity fragmentation, unresolved compatibility issues between various blockchain platforms, difficulties in complying with anti-money laundering (AML) requirements, as well as direct risks to the monetary sovereignty of states. In his opinion, such assets may be useful only in narrow specialized niches, but not as a universal payment infrastructure.
The alternative promoted by the BIS is tokenized deposits. Their key advantage is maintaining a direct link with the banking system, which allows blockchain technologies to be organically integrated into the existing financial architecture without creating a parallel shadow system. However, De Cos acknowledged that this approach also faces challenges in the areas of regulation, governance, and interoperability.
Tightening oversight of issuers
The position of the BIS head coincided with the publication of a new study by the Financial Stability Institute, a division of the organization. Analysts examined stablecoin issuance rules in various jurisdictions and found significant discrepancies in approaches. They propose considering issuance, redemption, and reserve management as the basic set of issuer functions. Any additional operations—whether lending, staking, or custodial services—fundamentally change the risk profile and require additional protective mechanisms.
Particular concern is raised by the situation with non-bank issuers. While for traditional banks restrictions operate within the framework of consolidated oversight, large technology or cryptocurrency players can circumvent them through separate legal entities. In this regard, regulators insist on expanding oversight from the level of a specific issuer to the entire corporate group.
Conflict of two approaches
The BIS position sharply contrasts with sentiments in American government circles, which see stablecoins as a tool for strengthening the global dominance of the dollar and an additional source of demand for US Treasury bonds. The BIS itself does not deny the technological value of blockchain, but proposes to clearly separate crypto assets for specialized scenarios and mass payment infrastructure.
Under this arrangement, stablecoins will retain an important role in the crypto ecosystem, cross-border settlements, and DeFi, but their impact on the traditional payment system will remain limited. The basis of the tokenized financial infrastructure, meanwhile, should be commercial bank money.
It is also worth recalling the risks that the BIS has previously identified: stablecoin issuers hold significant portfolios of short-term government bonds, and mass token redemptions could trigger sales of these assets, creating destabilizing pressure on money markets.
My view: the BIS proposal is an attempt to maintain central banks' control over the monetary system in the era of digital assets. However, the bet on tokenized deposits looks logical: they allow for the benefits of blockchain without the risk of fragmentation and loss of monetary sovereignty. The only question is whether the banking system can offer the same speed and accessibility as stablecoins, or whether regulators will once again find themselves in the role of laggards.