BIS Chief Says Stablecoins Aren’t Reliable for Large-Scale Payments

The Bank for International Settlements said stablecoins face limits as a tool for large-scale payments and presented tokenized deposits as an alternative.

Cointelegraph reported on August 29 that BIS General Manager Pablo Hernandez de Cos said stablecoins “lack the trustworthiness required to serve as a means of payment that can be used at scale.” He said tokenized deposits offer a more direct way to harness the benefits of tokenization while preserving the foundation of the existing monetary system.

De Cos acknowledged that stablecoins could lower governments’ funding costs. But if bank deposits move in large amounts into stablecoins, banks’ funding costs would rise, potentially leading to higher borrowing rates for households and businesses.

He also cited limited interoperability among stablecoin platforms and the difficulty of applying anti-money laundering, or AML, rules consistently. De Cos added that wider use of dollar-pegged stablecoins outside the US could undermine countries’ monetary sovereignty and weaken the effectiveness of domestic monetary policy.