BIS Skeptical of Stablecoins as Payment Solution

The Bank for International Settlements (BIS) has expressed skepticism about the use of stablecoins as a reliable foundation for everyday payments on an economy-wide scale.

BIS head Pablo Hernández de Cos said that while stablecoins may be useful in certain scenarios, they do not yet meet the necessary criteria for mass payments. Instead, he advocates for tokenized bank deposits as a more sustainable option.

Centralized stablecoins, such as USDT and USDC, are backed by fiat reserves, but their reliability largely depends on the issuer and the quality of reserves. Decentralized stablecoins, like DAI, rely on crypto assets as collateral and smart contracts.

The BIS is concerned about market fragmentation, insufficient compatibility between systems, difficulties meeting Anti-Money Laundering (AML) requirements, and risks to monetary sovereignty associated with stablecoins.