BIS Says Stablecoins Not Reliable for Economy-Wide Payments

The Bank for International Settlements (BIS) has expressed skepticism about stablecoins becoming a widespread payment method. BIS General Manager Pablo Hernández de Cos stated that stablecoins face several fundamental limitations, including fragmentation, interoperability issues, and challenges with anti-money laundering compliance.

De Cos noted that while stablecoins may serve specific niche functions, they are not yet a convincing foundation for everyday payments on a global scale. The BIS suggests tokenized bank deposits as an alternative, which maintain a connection with the banking system and are better suited for integrating blockchain technology into existing financial infrastructure.

The BIS chief's stance coincided with the release of a new study by the Financial Stability Institute, which examined stablecoin issuance regulations across various jurisdictions. The authors suggest that issuance, redemption, and reserve management should be considered core functions of an issuer, and propose extending oversight from individual issuers to entire corporate groups.