BIS warns stablecoins lack credibility for mass payments

At the Jackson Hole Symposium, Pablo Hernández de Cos, General Manager of the Bank for International Settlements (BIS), criticized the role of stablecoins in the financial system. He argued that these digital assets lack the necessary credibility to handle large-scale payments reliably.

Hernández de Cos highlighted several structural deficiencies, noting that stablecoins lack uniformity, interoperability, and integrity. He specifically pointed to issues regarding par-redeemability and elasticity, which are essential for maintaining stability during periods of market stress. As a more robust alternative, he advocated for tokenized deposits to support the stability and efficiency of the monetary system.

The BIS also addressed risks such as digital dollarization and the potential for bank runs. Furthermore, a study from the Financial Stability Institute noted significant regulatory fragmentation across the US, EU, UK, Hong Kong, and Singapore, which complicates international transactions and encourages regulatory arbitrage.