Stablecoins not credible for payments at scale, BIS chief says

The Bank for International Settlements is renewing its criticism of stablecoins, questioning their credibility as everyday money as governments worldwide build regulatory frameworks around the tokens.

BIS General Manager Pablo Hernández de Cos, a candidate to succeed European Central Bank President Christine Lagarde next year, argued that stablecoins do not credibly function as a means of payment at scale. He said tokenized bank deposits offer a stronger alternative, Reuters reported on Friday.

“Tokenised deposits offer a more direct path to harness tokenisation while preserving the monetary system’s foundations,” de Cos said.

The comments come as regulators worldwide grapple with stablecoin adoption, while a new study from the BIS-linked Financial Stability Institute (FSI) shows significant differences in how major markets regulate stablecoin issuers.

Stablecoins could lower government borrowing costs

Hernández de Cos acknowledged that stablecoins could lower government borrowing costs, an argument also made by US Treasury Secretary Scott Bessent.

But the effect could cut both ways for consumers. If customers move bank deposits into stablecoins, banks could face higher funding costs and pass those expenses on to households and businesses through higher borrowing rates, Hernández de Cos said.