Why the BIS Says Stablecoins Cannot Power Everyday Payments at Scale

Pablo Hernández de Cos’s message at Jackson Hole was not that stablecoins have no use. It was that their current design makes them a weak foundation for a universal, everyday payment system. In his view, tokenised bank deposits—linked to commercial banks and ultimately settled in central-bank money—offer a more credible route to modernising payments while preserving trust in money. 2

The BIS’s core test for digital money

De Cos framed the debate around two properties: a common unit of account and the singleness of money. Singleness means that different forms of money denominated in the same currency should be interchangeable at face value, with final redemption into central-bank money. A customer should not need to assess which bank issued the payment instrument before accepting it. 2 9

That standard is easy to take for granted in the existing banking system. Commercial-bank deposits can be used across the economy because central-bank settlement infrastructure supports their conversion at par into the sovereign unit of account. Tokenised deposits are intended to preserve that structure while adding programmable, potentially faster digital transfers. 10 12

Why stablecoins struggle to scale as payments

Fragmentation can break “singleness”

Stablecoins are private claims issued by different entities. If a payer holds one token and a payee accepts another, the payment may require a secondary-market exchange rather than a direct transfer at face value. That creates the possibility of price deviations, redemption friction and uncertainty about whether one digital dollar—or euro—will be treated exactly like another. 2 10

The BIS’s concern is therefore deeper than short-term price volatility. It is whether privately issued tokens can preserve the monetary system’s assumption that money is universally accepted at par. The BIS has previously warned that stablecoins can deviate modestly from par in normal conditions and more sharply during stress. 5

Separate blockchains limit interoperability

Stablecoins also operate across networks that do not automatically share liquidity, settlement or technical standards. A token on one blockchain may not be directly usable on another. Bridges can connect networks, but they add technical dependencies and another layer of risk rather than creating seamless interoperability by default. 5 11

For a mass payment system, users need to send and receive funds across platforms with confidence about finality. Fragmentation makes that experience more like exchanging assets between networks than using a single, unified monetary system. 9

Compliance can be uneven

De Cos also raised financial-integrity concerns around public, permissionless blockchains, pseudonymous activity, self-custodied wallets and direct wallet-to-wallet transfers. Those features can make anti-money-laundering and counter-terrorist-financing controls harder to apply consistently than in a supervised, account-based system. 2 7

That does not mean every stablecoin transaction is illicit or impossible to monitor. The argument is that a payment instrument intended to become systemic should embed robust compliance and resilience across its design, rather than relying on uneven controls at the edges of the network.

The monetary-sovereignty concern

Foreign-currency stablecoins could become widely used in economies whose domestic currencies are less attractive or less stable. De Cos warned that this could encourage substitution away from a country’s own unit of account and weaken monetary sovereignty. 2

The concern is especially relevant for dollar-linked tokens. Their wider use could extend access to dollar-denominated payments, but it could also make domestic monetary systems more dependent on a foreign currency and on private issuers’ reserve and redemption arrangements.

This is where the BIS position differs from the more optimistic U.S. policy case. Treasury Secretary Scott Bessent has argued that dollar stablecoins could strengthen the dollar’s international role and increase demand for the U.S. Treasuries backing them. De Cos acknowledged that reserve-backed stablecoins could support demand for government securities and potentially reduce sovereign funding costs, but he presented that benefit alongside the risks to monetary sovereignty and financial stability. 2

The banking trade-off

A large migration from ordinary bank deposits into stablecoins could change how banks fund themselves. Deposits are an important source of relatively stable, low-cost funding. If customers moved substantial balances into stablecoins, banks could face higher funding costs and might pass those costs through in the form of more expensive or more cyclical credit for households and businesses. 2

The trade-off is central to the policy debate. Stablecoins may create demand for safe government assets, but widespread adoption could also reshape bank intermediation and the availability of credit. The BIS therefore treats the consequences as something policymakers would need to monitor, particularly under stress, rather than as a simple efficiency gain. 2

A two-tier system rather than a ban

De Cos’s proposal was a division of roles, not necessarily the elimination of stablecoins. Tokenised deposits would handle most general-purpose, day-to-day payments within the existing two-tier monetary architecture: commercial banks provide money to the public, while central banks provide settlement assets and the ultimate monetary anchor. 2 6

Stablecoins could still serve narrower or specialised purposes where their design is appropriate and regulation is strong. But the BIS view is that the core payment system should rely on instruments that preserve parity, finality and broad interoperability.

Tokenised deposits still have unresolved problems

The BIS’s preferred alternative is not ready-made infrastructure. Tokenised deposits themselves must overcome fragmented platforms, inconsistent standards and unresolved governance questions. A functioning system would also require clear legal rules for settlement finality, compatible data arrangements and reliable access to central-bank money on programmable rails. 2 7

That qualification matters. The debate is not simply “stablecoins versus a finished replacement.” It is a choice between different monetary architectures, each of which needs technical, legal and regulatory work before it can support large-scale payments.

The practical takeaway

De Cos’s argument can be reduced to one principle: payment innovation should improve speed and programmability without weakening the properties that make money trustworthy. Stablecoins demonstrate that digital assets can support new payment functions, but the BIS believes current designs do not reliably provide singleness, interoperability and consistent financial-integrity safeguards at scale. 2 7

Tokenised deposits are presented as the stronger foundation because they can combine programmable payment technology with commercial-bank money and central-bank settlement. Stablecoins may coexist with that system, but in a more limited role. Whether tokenised deposits can deliver on the promise will depend on solving their own interoperability, governance and legal-settlement challenges.