Bank for International Settlements General Manager Pablo Hernández de Cos made an important statement. He believes that stablecoins do not yet appear to be a reliable means of payment. Reuters reported this citing the official's remarks at the Federal Reserve symposium in Jackson Hole. According to him, digital assets face a number of fundamental limitations. These include market fragmentation and serious interoperability issues. There are also difficulties with meeting anti-money laundering requirements. An additional risk is posed by the potential threat to the monetary sovereignty of individual states. Stablecoins can only perform certain specialized functions in the modern economy. They do not yet appear to be a convincing foundation for everyday global settlements.
The Bank for International Settlements sees tokenized bank deposits as an alternative. They maintain a direct link to the traditional banking system. The regulator considers them more suitable for implementing distributed ledgers. This will allow innovations to be organically integrated into the existing financial infrastructure. At the same time, de Cos acknowledged that deposits themselves face challenges. They still have difficulties with interoperability, regulation, and corporate governance. The position of the regulator's head coincided with the publication of a new dedicated study. It was prepared by the Financial Stability Institute division of the international organization. The authors examined stablecoin issuance rules across various global jurisdictions. They concluded that there are significant differences in approaches to issuers.
Researchers propose treating the issuance and redemption of tokens as the issuer's core functions. Reserve management is also part of this minimum set of operations. Additional services can significantly alter the risk profile of a specific company. These include lending, asset locking, and custody services. Such operations require the introduction of additional protective mechanisms for clients. The regulator is particularly concerned about the situation with non-bank issuers. For banks, restrictions operate within the framework of consolidated financial supervision. Large players from other segments can potentially circumvent these rules. They use separate legal entities within holding companies for this purpose. Therefore, oversight must be extended to the issuer's entire corporate group.
The position of the Bank for International Settlements looks particularly noteworthy against the current backdrop. The stablecoin market is showing rapid growth worldwide. US authorities are far more favorable toward them. American officials view them as a tool for strengthening the role of the dollar. They also serve as an additional source of demand for government bonds. The regulator itself does not deny the obvious benefits of the underlying technology. However, it proposes separating crypto assets for specialized use cases. Mass payment infrastructure should rely on other financial instruments. Stablecoins will remain an important element of the digital asset market and cross-border settlements. They will also maintain their positions in the decentralized finance sector.
Commercial bank money will form the basis of tokenized infrastructure. It will exist in the form of those same tokenized deposits. The regulator has already pointed to certain systemic risks posed by stablecoins themselves. Their issuers hold significant portfolios of short-term government bonds. Mass token redemptions could force companies to sell such assets. This creates additional pressure on global money markets. In June, the organization's specialists published their annual report. They noted that current stablecoins do not provide the key properties of money. Their further growth may increase fragmentation across the entire financial system. This creates additional risks for countries with weak currencies.