BIS Rejects Stablecoins: Banks Forge Ahead Anyway

At the Jackson Hole Economic Policy Symposium on August 28, Bank for International Settlements General Manager Agustín Carstens delivered a keynote that effectively rejected stablecoins as a viable payments instrument. He used a three-test framework to argue that stablecoins fail every criterion that defines sound money: singleness, interoperability, and integrity.

The singleness test is intuitive, one dollar should be worth the same regardless of the institution holding it. Carstens illustrated the problem with a scenario where Ben holds USDT and Marie holds USDC, and a merchant accepts only one, causing the system to fracture into parallel currencies with different acceptance and risk profiles.

The interoperability test follows naturally, central bank money settles across all participants without friction, while stablecoins operate on fragmented rails with no universal settlement layer. A USDT transaction on Tron is not interchangeable with a USDC transaction on Ethereum without conversion, which tokenized deposits aim to eliminate.

The integrity test drew the sharpest line, central bank money carries an implicit guarantee of finality backed by sovereign authority, while stablecoins carry counterparty risk and regulatory risk. Carstens recommended tokenized deposits as the institutional alternative, claims on commercial banks represented on programmable rails that preserve the two-tier monetary structure while adding settlement speed and composability.

The BIS has been advancing this position through its Innovation Hub's Project Agorá, which brings together seven central banks and major commercial banks to prototype cross-border tokenized deposit settlement. However, a consortium of twelve global heavyweights is actively building a stablecoin venture on public chains, directly competing with the BIS-endorsed tokenized deposit model.

JPMorgan is separately evaluating its own stablecoin, while Fireblocks reports over $100 billion in monthly stablecoin volume, growing 300% year-over-year. The industry is not waiting for the BIS to approve its architecture.