The BIS is not arguing that stablecoins have no use.

Its claim is narrower and more consequential: in their current form they do not yet possess the properties required to function as money at scale.

General Manager Pablo Hernández de Cos set out that position at Jackson Hole on August 28 in a speech comparing stablecoins with tokenised bank deposits.

The location was unusually appropriate. Wyoming itself has moved to issue the Frontier Stable Token, giving Hernández de Cos an immediate example for the larger question: how can money become technologically different without losing the institutional qualities that make people accept it without investigating every payment instrument first?

The first BIS concern is singleness

Two dollars held at two different commercial banks are expected to remain worth the same amount.

The BIS describes this as the singleness of money.

Hernández de Cos uses USDT and USDC to demonstrate why independent stablecoins complicate that principle.

If one person holds USDT while the recipient accepts only USDC, the payment may require a market conversion between the two tokens.

Secondary-market prices can deviate from par, particularly during stress.

One tokenised dollar therefore cannot always be treated as automatically identical to another.

Tokenised deposits preserve an existing monetary anchor

Commercial banks already issue different private liabilities, but interbank settlement ultimately relies on central bank money.

That common settlement layer helps preserve par value across banks.

A tokenised deposit retains that relationship while recording the bank liability on programmable infrastructure.

The BIS consequently prefers modernising the existing two-tier monetary architecture rather than replacing it with multiple privately issued currencies connected principally through markets.

Public blockchains create a second problem: fragmentation

Stablecoins increasingly exist across several blockchains and layer-two networks.

That expands distribution but does not create automatic interoperability.

The same branded stablecoin on two different networks may require bridges or other mechanisms before value can move between them.

Those mechanisms add operational, security and settlement risks.

For infrastructure intended to process payments at enormous scale, the BIS considers that fragmentation a fundamental issue.

Tokenised bank networks are not magically interoperable either

Hernández de Cos acknowledges this directly.

Permissioned deposit platforms can also become isolated networks.

The BIS argument is that tokenised central bank reserves or links to existing reserve accounts can provide a common settlement asset between regulated networks.

The interoperability problem therefore remains, but the institutional architecture already contains a potential monetary bridge.

Financial integrity creates the third challenge

Public blockchains allow substantial value to be held in self-custodied wallets outside a continuously supervised financial intermediary.

The BIS argues that this makes anti-money-laundering and counter-terrorist-financing rules harder to enforce.

Hernández de Cos points to the growing importance of wallet-to-wallet stablecoin transfers and the large amount of balances held outside traditional KYC environments.

Self-custody does not make a payment illicit. It does make the conventional compliance perimeter harder to identify.

Three questions must be answered before stablecoins can become money at scale

The first concerns par redemption and liquidity.

Can every token reliably be redeemed at full value during both ordinary conditions and a run? What reserves and backstops would be necessary?

The second concerns interoperability and finality across blockchains.

The third concerns accountability and financial integrity when transactions occur through decentralised infrastructure.

For the BIS, current arrangements have not answered those questions strongly enough.

That does not produce a stablecoin ban

The proposed future explicitly allows coexistence.

Tokenised deposits would handle the bulk of everyday payments and wholesale settlement within prudential regulation and with central bank money providing final settlement.

Stablecoins could retain specialist roles, including areas such as decentralised lending.

If they are used as payment instruments, the BIS wants robust regimes capable of enforcing par redemption.

Alternatively, some arrangements could be treated more explicitly as investment products with corresponding disclosure and conduct requirements.

Tokenised deposits are the BIS favourite

A tokenised deposit remains a claim on a commercial bank.

The difference is that it is represented on programmable infrastructure.

That design can preserve banking supervision and central-bank settlement while importing capabilities such as programmability and atomic transactions.

The BIS therefore wants many of the technological properties demonstrated by crypto without making an independent stablecoin the system's monetary anchor.

The institution accepts that crypto demonstrated useful technology

This is not a defence of an unchanged banking system.

Hernández de Cos identifies programmability, atomic settlement and around-the-clock operation as genuine advantages of tokenisation.

The disagreement is less about token technology than about what kind of money should travel across those programmable rails.

Widespread stablecoins could change bank funding

The BIS Annual Economic Report examines what might happen if households shifted substantial balances from commercial-bank deposits into stablecoins.

Banks could be forced to pay more to retain funding.

Higher funding costs could reduce credit supply or make loans more expensive.

The BIS stresses that modelled effects are modest in several scenarios and depend heavily on adoption, regulation and reserve design.

These are risk channels, not forecasts of inevitable outcomes.

Stablecoin issuers could simultaneously lower sovereign borrowing costs

Large issuers hold substantial quantities of safe liquid reserve assets, including short-term government securities.

Greater stablecoin adoption could therefore increase demand for sovereign debt and lower government interest expenses.

A June 2026 BIS working paper models these opposing mechanisms: higher bank funding costs on one side and expanded fiscal space on the other.

In its US calibration, the banking channel modestly dominates over the long run, although the results remain highly dependent on assumptions.

Outside the United States, dollarisation becomes another concern

Most stablecoin value is denominated in US dollars.

If residents of another economy increasingly use dollar stablecoins instead of domestic money, tokenisation can become a new transmission channel for dollarisation.

That could weaken domestic monetary sovereignty and connect local financial conditions more directly to dollar and crypto markets.

Washington sees almost the same mechanism as an advantage

The contrast with US policy is unusually clear.

Treasury Secretary Scott Bessent has described dollar stablecoins as technology capable of reinforcing the dollar's reserve-currency status, expanding access to the dollar economy and increasing demand for US Treasuries.

The GENIUS Act became law in July 2025, establishing a federal framework for payment stablecoins.

Treasury is still implementing that framework. On August 17, 2026 it opened another consultation on rules governing payment-stablecoin issuance, offering and sale.

The divergence is therefore practical rather than rhetorical: the United States is actively constructing a regulated stablecoin industry while the BIS argues that stablecoins should not become the central architecture of global money.

The real dispute is increasingly about who issues the money

Neither side is rejecting tokenisation.

The BIS wants programmable finance. US authorities are regulating rather than prohibiting stablecoins. Banks themselves are developing distributed-ledger infrastructure.

The deeper question is institutional.

When securities and other assets move onto programmable networks, what monetary claim should settle the transaction?

A privately issued stablecoin, a tokenised commercial-bank deposit or central bank money?

The blockchain layer may increasingly become common ground. The fight over the money running on top of it is only beginning.