BIS warns about stablecoins as tokenized deposits gain support

Monday 31 August 2026 - 11:45

By: Azzat Manal

BIS warns about stablecoins as tokenized deposits gain support

The Bank for International Settlements (BIS) has raised concerns about the growing role of stablecoins in the global financial system, arguing that widespread adoption could create challenges for commercial banks, monetary policy and the functioning of national currencies.

Pablo Hernández de Cos, general manager of the BIS, said stablecoins do not yet offer all the characteristics needed to become a reliable and scalable means of payment for everyday transactions. In contrast, he highlighted tokenized bank deposits as a potential way to bring blockchain-based technology into the financial system while preserving the foundations of traditional banking.

Speaking at the Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming, Hernández de Cos said stablecoins and tokenized deposits could coexist, but should serve different purposes. In his view, tokenized deposits could play a central role in day-to-day payments, while stablecoins may be better suited to more specialized applications.

Stablecoins are digital assets designed to maintain a relatively stable value, often by being linked to currencies such as the U.S. dollar. Their increasing use has attracted attention from financial regulators, particularly as some stablecoins have expanded rapidly across international markets.

According to the BIS official, stablecoins could provide certain economic benefits, including potentially reducing some government borrowing costs. However, he warned that these advantages could be accompanied by significant pressure on the banking sector.

If consumers and businesses moved substantial amounts of money from traditional bank deposits into stablecoins, banks could face higher funding costs. That increase could eventually translate into more expensive credit for households and companies.

A broader shift toward stablecoins could also affect the traditional relationship between banks, deposits and lending. As digital assets become increasingly attractive as payment instruments and stores of value, they could compete directly with bank deposits for customers’ funds.

Hernández de Cos also pointed to the potential impact on the concept of monetary unity. Moving between different forms of money could involve conversion costs, while limited interoperability between separate stablecoin networks could make transactions more complicated.

Regulatory concerns remain another major issue. The international expansion of stablecoins raises questions surrounding financial supervision, consumer protection, anti-money-laundering measures and the rules governing transactions across different digital platforms.

The BIS has also expressed particular concern about the international use of dollar-denominated stablecoins. Their growing popularity outside the United States could contribute to what economists describe as “digital dollarization,” particularly in countries where residents increasingly use dollar-linked digital assets instead of local currencies.

Such a development could weaken the ability of national central banks to influence domestic financial conditions. If households and businesses increasingly rely on dollar-linked stablecoins, local monetary policy could become less effective and domestic economies could become more exposed to decisions taken by foreign central banks.

By comparison, tokenized bank deposits could offer a way to modernize payments without fundamentally replacing the existing monetary system. Tokenization could make bank deposits faster and more flexible in digital environments while retaining their connection to regulated financial institutions.

However, the development of tokenized deposits also requires solutions to technological and regulatory challenges. Interoperability between platforms, governance arrangements, legal recognition and settlement mechanisms will all need to be addressed before such systems can operate on a large scale.

The debate highlights a broader question facing policymakers around the world: whether the future of digital finance should be built primarily around privately issued stablecoins or through the modernization of existing forms of money.

For the BIS, expanding the capabilities of regulated bank deposits through tokenization may offer a more gradual path toward digital finance, allowing technological innovation to develop without fundamentally disrupting the structure of the global monetary system.