BIS Chief Pablo Hernández de Cos argues stablecoins lack credibility at scale and poses risks to monetary sovereignty, favoring tokenized deposits instead.
DeFi & Yields ·
Bank for International Settlements General Manager Pablo Hernández de Cos has argued that stablecoins lack the credibility needed to function as a widespread payment method, while tokenized deposits represent a more viable path for leveraging blockchain technology. Speaking at the Jackson Hole Economic Policy Symposium, De Cos stated both mechanisms could operate in parallel, though tokenized deposits should dominate routine transactions while stablecoins fill niche roles.
De Cos identified multiple systemic concerns with stablecoins at scale. Large-scale migration from bank deposits to stablecoins risks elevating bank funding costs and lending rates for consumers. He also flagged inadequate interoperability between systems and enforcement gaps in anti-money-laundering compliance. Widespread adoption of dollar-pegged stablecoins could erode monetary sovereignty and diminish the potency of domestic monetary policy, though stablecoins might paradoxically reduce government borrowing costs by boosting demand for Treasury securities.
Tokenized deposits face their own hurdles: interoperability, governance structures, and unresolved legal frameworks all require resolution before such systems can mature. The distinction De Cos drew positions tokenized bank liabilities as preferable to decentralized stablecoins for mainstream payment infrastructure, leaving open how regulators might enforce such a preference and whether market participants will adopt it.