BIS Favors Tokenized Deposits Over Stablecoins for Mass Payments
The Bank for International Settlements (BIS) has weighed in on the debate over stablecoins, urging that tokenized deposits be used instead of stablecoins for everyday digital payments. According to a recent report by Reuters, BIS General Manager Pablo Hernandez de Cos made this statement at the Jackson Hole Economic Policy Symposium in Wyoming.
De Cos argued that while stablecoins can coexist with tokenized deposits, they are not well-suited for mass payments due to their potential impact on banks' funding costs and borrowing costs for consumers. Tokenized deposits, on the other hand, offer a more direct way to harness the benefits of tokenization without disrupting the existing monetary system.
The BIS also expressed concerns that the spread of dollar-pegged stablecoins could undermine monetary sovereignty outside the US by making central banks' monetary policy less effective and domestic financial conditions more dependent on US policy. De Cos emphasized the need for clarity on interoperability between financial institutions and blockchains, governance, legal rights, and standards for final settlement.