Pablo Hernández de Cos used his August 28 Jackson Hole speech to compare two competing paths for tokenized money.

One is already familiar to crypto users: privately issued stablecoins circulating across public blockchains. The other keeps commercial-bank deposits at the center of the system but represents those deposits on programmable platforms.

The BIS general manager evaluates both against three monetary properties: singleness, interoperability and financial integrity.

Stablecoins currently fall short on all three, he argues.

USDT and USDC may both represent dollars, but they are not the same dollar

The first problem is what central bankers call the singleness of money.

If two claims are denominated in the same currency, users should be able to treat them as interchangeable at par.

Hernández de Cos illustrates the problem with USDT and USDC. A payer holding Tether may need to sell it and purchase USDC if the recipient only accepts Circle's stablecoin.

That conversion takes place in a secondary market where prices can deviate from one dollar, particularly during periods of stress.

The nominal unit is identical. The actual payment route is not.

Tokenized bank deposits would remain bank liabilities settled between institutions using central-bank money. In the BIS model, that settlement layer provides the anchor that keeps different commercial-bank claims redeemable at par.

Public blockchains remain a collection of networks rather than one payment system

Interoperability is the second weakness.

The same stablecoin can exist on multiple base chains and scaling networks without those versions being natively interchangeable.

Moving assets between them can require bridges or other mechanisms that introduce additional cost and technical risk.

Hernández de Cos concedes that tokenized deposits are not genuinely interoperable today either. Most existing banking experiments operate inside permissioned platforms that remain isolated from one another.

His argument is that tokenized central-bank reserves could eventually provide a common settlement asset across those networks.

Self-custody creates a difficult AML problem

Financial integrity forms the third part of the argument.

Stablecoins can circulate through self-hosted wallets on public blockchains, allowing transfers to occur without every stage passing through an institution performing know-your-customer checks.

The BIS argues that this architecture complicates consistent enforcement of anti-money-laundering and counter-terrorist-financing rules.

Hernández de Cos points to evidence that a large share of stablecoin balances sits in self-custodied wallets and that wallet-to-wallet activity is becoming increasingly important.

Tokenized bank deposits would remain account-based liabilities inside supervised institutions, making those controls easier to apply through existing banking frameworks.

Mass stablecoin adoption could also change who funds banks

The speech goes beyond payment mechanics.

Stablecoin issuers typically hold reserves in highly liquid assets such as short-term government debt, bank deposits or potentially central-bank reserves depending on the regulatory framework.

That structure can create benefits. Hernández de Cos acknowledges the argument that greater stablecoin demand may increase demand for sovereign bills and therefore reduce government borrowing costs.

The money has to come from somewhere, however.

If households move deposits out of commercial banks and into stablecoins, banks lose a relatively stable source of funding. Replacing it may become more expensive, potentially raising borrowing costs for households and businesses.

A benefit for Treasury funding can therefore coexist with more expensive private credit.

Dollar stablecoins look very different outside the United States

The geopolitical concern is digital dollarization.

Most large stablecoins are denominated in US dollars. If households in another country increasingly use those tokens instead of their domestic currency, local monetary policy can become less effective.

Hernández de Cos warns that broad adoption could weaken monetary sovereignty, reduce domestic policy transmission and bind local financial conditions more tightly to policy decisions made abroad.

That creates a fundamental asymmetry.

Dollar stablecoins may reinforce the global role of the dollar from a US perspective while simultaneously undermining the monetary autonomy of another jurisdiction.

The BIS is not proposing that stablecoins disappear

This is the most important qualification in the speech.

Hernández de Cos explicitly describes a future in which stablecoins and tokenized deposits coexist.

He simply gives them different jobs.

Tokenized deposits should, in his view, handle the bulk of everyday payments and wholesale settlement inside prudential frameworks with settlement in central-bank money.

Stablecoins could continue serving specialized roles, including decentralized lending pools.

If they are used for payments, the BIS wants robust and transparent regulation capable of enforcing redemption at par. Alternatively, stablecoins could be treated explicitly as investment products subject to appropriate disclosure and conduct rules.

Tokenized deposits are not a finished alternative

The speech is notably careful about that limitation.

There is currently no large multi-bank, cross-jurisdictional ecosystem in which tokenized deposits operate through a genuinely interoperable framework.

Most projects remain confined to permissioned platforms, and some products marketed as tokenized deposits are closer in practice to bank-issued stablecoins.

Interoperability, governance, access rules, settlement finality, smart-contract enforceability, cybersecurity and recovery procedures all remain unresolved at scale.

The BIS is therefore not comparing a flawed crypto product with a finished banking product.

It is comparing two incomplete paths and making clear which one it believes should carry the majority of the monetary system.

Central bankers are not rejecting blockchain itself

That distinction became even clearer elsewhere at Jackson Hole.

On the same day, ECB Executive Board member Isabel Schnabel argued that central banks themselves should move on-chain, bringing central-bank money and liquidity operations into tokenized environments.

The emerging institutional position is therefore more nuanced than a simple blockchain-versus-banks argument.

Central bankers increasingly accept the usefulness of distributed ledgers, programmability and tokenization.

What they remain much less willing to concede is that privately issued stablecoins should become the monetary foundation underneath those technologies.

The argument has shifted from whether finance will use blockchain to a more important question: what form of money should sit on it?