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Pablo Hernández de Cos Rejects Stablecoins as Primary Payment Method in Favor of Tokenized Deposits

Pablo Hernández de Cos, General Manager of the Bank for International Settlements (BIS), argued at the Jackson Hole Economic Symposium that stablecoins are less viable as a primary payment method than tokenized deposits. While stablecoins are currently popular among retail and businesses, de Cos highlighted that they lack 'singleness,' meaning they do not always guarantee redemption at par with central bank money. He also noted that stablecoins are fragmented across different blockchains, lacking the interoperability and financial integrity provided by the existing banking infrastructure. De Cos warned that the widespread adoption of USD-based stablecoins could threaten monetary sovereignty, potentially weakening local domestic policies in countries where the U.S. dollar is not the primary currency. In contrast, tokenized deposits offer a more direct path to harness tokenization while preserving the foundations of the monetary system. While private entities like Tether and Circle lead the stablecoin market, the BIS favors bank-issued alternatives. Despite these theoretical critiques, stablecoin transactions continue to grow in practical applications, particularly in cross-border payments where they offer speed and cost advantages over traditional banking rails.

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