The head of the Bank for International Settlements (BIS) has questioned whether privately issued digital tokens pegged to fiat currencies can serve as a dependable way to move money across the economy.
Speaking at the Federal Reserve’s Jackson Hole symposium on 28 August 2026, BIS General Manager Pablo Hernández de Cos argued that stablecoins, in their present form, fall short of the institutional standards required for large-scale payments.
He instead pointed to tokenised bank deposits as a more promising route for capturing the advantages of distributed-ledger technology without undermining the two-tier monetary system.
Hernández de Cos described money as an institutional arrangement rather than merely a technical tool.
Its usefulness at scale depends on a shared unit of account and “singleness”: every instrument denominated in that unit must be interchangeable at par and ultimately redeemable in central bank money.
Elasticity of liquidity, interoperability and financial integrity complete the list of properties that allow payments to settle “with no questions asked.”
Today’s two-tier architecture—central-bank reserves plus supervised commercial-bank liabilities—delivers those properties.
Tokenisation and programmable ledgers can reduce remaining frictions, he said, but the design of the instruments that run on those ledgers matters.
Stablecoins, typically issued as bearer-like tokens on public blockchains, fail several of those tests.
Because different issuers’ coins are not automatically interchangeable at par, a payer holding one brand must often sell it in a secondary market and buy another before the recipient will accept the transfer.
Price deviations from the peg, especially in periods of stress, mean the payment may not clear at face value.
Networks themselves remain fragmented across base chains and scaling layers, so even the “same” token on different platforms requires costly or risky bridges.
Integrity is equally problematic: a large share of balances sits in self-custodied wallets, and many transfers occur peer-to-peer outside venues that apply consistent know-your-customer and anti-money-laundering controls.
Macro-financial consequences compound the operational shortcomings. If households and firms shift deposits into stablecoins, banks lose a stable funding source and may face higher wholesale costs, tighter lending standards and higher rates for ordinary borrowers.
Reserve-asset choices—bank deposits, short-term government securities or central-bank reserves—each create different pressures on bank liquidity and money markets.
In a run, fire sales of those reserves could transmit stress to core markets.
At the same time, large foreign demand for dollar-pegged tokens could lower sovereign borrowing costs while accelerating digital dollarisation in other jurisdictions, weakening local monetary-policy transmission.
Tokenised deposits, by contrast, remain bank liabilities settled in central-bank money.
They therefore preserve singleness, keep credit intermediation inside the supervised banking system and make integrity controls easier to enforce.
Hernández de Cos suggested the two instruments could coexist, with tokenised deposits handling the bulk of everyday and wholesale payments and stablecoins occupying more specialised niches, such as certain decentralised-finance pools.
Even tokenised deposits, however, still require progress on platform interoperability, governance and legal finality of settlement.
Closing the gaps that currently prevent stablecoins from functioning as money at scale would demand enforceable par redemption in all states of the world, credible cross-chain settlement and consistent application of financial-integrity rules.
Those questions, he concluded, are institutional rather than purely technical. Policymakers therefore need internationally consistent standards that address shortcomings while allowing well-designed applications to develop inside a framework that continues to anchor trust in money.