3rd September 2026
By Anjali Kochhar
Stablecoins may be gaining traction across the digital asset industry, but the Bank for International Settlements (BIS) believes they are still not ready to become a mainstream payment instrument.
Pablo Hernández de Cos, General Manager of the BIS, said stablecoins currently fall short of several fundamental requirements needed for money to function reliably at scale. He made the comments at the Jackson Hole Economic Symposium on August 28, where he discussed the future of stablecoins and tokenised deposits.
Stablecoins are digital assets designed to maintain a stable value, generally by being pegged to currencies such as the U.S. dollar. Their growing use has positioned them as a potential alternative for payments, cross-border transfers and other financial applications.
Interoperability Remains a Major Challenge for Stablecoins
However, de Cos argued that their current structure creates several challenges. One of the biggest concerns is interoperability. Different stablecoins often operate across separate blockchain networks, meaning users may need to convert one stablecoin into another before completing a transaction. This can introduce additional costs, risks and potential deviations from the intended one-to-one value.
The BIS also highlighted concerns surrounding financial integrity. Stablecoins operating on public blockchains can involve self-custodied wallets and peer-to-peer transfers, making anti-money laundering and counter-terrorist financing controls more difficult to enforce consistently. (Bank for International Settlements)
How Stablecoins Could Affect Banks and Financial Stability
Another concern is the potential impact on the traditional banking system. If stablecoins become widely adopted, their issuers could shift large amounts of funds into bank deposits, government securities or central bank reserves. According to the BIS, this could increase banks’ funding costs and potentially influence lending conditions.
De Cos also warned that widespread use of foreign-currency stablecoins could create monetary sovereignty risks, particularly in emerging markets. Greater dependence on dollar-backed digital assets could weaken domestic monetary policy transmission and increase exposure to external financial conditions.
Instead of relying primarily on stablecoins for everyday payments, the BIS is advocating for tokenized bank deposits. These would bring blockchain-based programmability and faster settlement to existing bank money while maintaining connections to central bank money.
The BIS does not rule out a future role for stablecoins. De Cos suggested they could continue serving specialized purposes, including certain applications in decentralized finance, provided appropriate regulatory safeguards are established.
The broader message from the BIS is that tokenization could significantly modernize payments, but innovation should not come at the expense of trust, financial stability, and the existing monetary framework.
