BIS chief says stablecoins can’t scale as payments

The head of the Bank for International Settlements delivered one of the sharpest critiques yet of stablecoins on Friday, telling central bankers gathered in Wyoming that the fast-growing crypto instruments cannot credibly serve as a means of payment at scale.

De Cos Challenges Stablecoin Ambitions

Pablo Hernández de Cos, general manager of the BIS, used his address at the Federal Reserve's Jackson Hole Economic Policy Symposium to argue that tokenized bank deposits — not stablecoins — represent the more viable path for modernizing payments while preserving the monetary system's foundations.reuters+1

In a speech titled "Pushing the monetary frontier: stablecoins and tokenised deposits," de Cos said the two instruments could coexist but that tokenized deposits should handle the bulk of day-to-day transactions, with stablecoins confined to more specialized roles.bis+1

De Cos outlined several structural weaknesses. Stablecoins break the "singleness" of money because users cannot move between products without incurring costs, he said. Platforms lack genuine interoperability, and anti-money-laundering controls are difficult to apply consistently. He also warned that widespread adoption of dollar-pegged stablecoins could erode monetary sovereignty in non-U.S. jurisdictions and tie local economic conditions more closely to external policy stances.investing+1

A Direct Rejoinder to Washington

The remarks amount to a counterpoint to U.S. Treasury Secretary Scott Bessent, who has championed stablecoins as a digital revolution capable of cementing the dollar's reserve-currency status and generating demand for trillions of dollars in Treasuries. De Cos acknowledged stablecoins could lower sovereign borrowing costs, as Bessent has argued, but cautioned that bank funding costs could rise as deposits migrate to stablecoin platforms, ultimately pushing up borrowing rates for ordinary consumers.reuters+1

Crypto Enters the Jackson Hole Canon

The speech marked the first time cryptocurrency and stablecoins appeared on the official Jackson Hole agenda in the symposium's 48 editions. This year's theme, "Financial Innovation: Implications for Payments and Policy," placed digital payments at the center of the central banking community's annual policy debate.cryptoslate+2

De Cos, who is considered a candidate to succeed European Central Bank President Christine Lagarde, noted that even his preferred alternative — tokenized deposits — still faces unresolved challenges around interoperability, governance, and legal frameworks for settlement.investing+1