The head of the Bank for International Settlements (BIS) pointed to a lack of reliability in stablecoins as a means of large-scale payments.

On Aug. 29, foreign media including blockchain outlet Cointelegraph and Reuters reported that BIS General Manager Pablo Hernandez de Cos (파블로 에르난데스 데 코스) said tokenised deposits are a stronger alternative that can harness tokenisation while maintaining the foundations of the monetary system.

Hernandez de Cos said stablecoins would struggle to reliably play the role of everyday money. With governments building regulatory frameworks for stablecoins, the BIS has reaffirmed its critical stance.

The key issues are payment scalability and the impact on the financial system. Hernandez de Cos acknowledged that stablecoins could lower government borrowing costs. He warned, however, that if bank deposits move into stablecoins, banks’ funding costs could rise and that burden could lead to higher lending rates for households and companies.

He also pointed to operational limits. He said interoperability among stablecoin platforms is limited and that it is difficult to apply anti-money-laundering (AML) rules consistently. He also mentioned that if U.S. dollar-pegged stablecoins are used more widely outside the United States, countries’ monetary sovereignty could weaken and the effectiveness of domestic monetary policy could decline.

A study released by the BIS’ Financial Stability Institute (FSI) also showed regulatory differences across major markets in detail. The study compared stablecoin rules in the United States, the European Union, Britain, Hong Kong and Singapore and found significant differences in who can issue stablecoins and the scope of businesses issuers can conduct in parallel.

The United States and Singapore were taking a relatively strict approach to non-bank issuers. Under the U.S. Genius Act, issuers of payment stablecoins generally exclude lending, staking, proprietary trading and third-party crypto custody from their permitted scope of activities. By contrast, Hong Kong, Britain and the European Union chose a structure that allows some additional businesses subject to separate authorisation, regulatory approval or other required permits. That means institutional design differs by market even under stablecoin regulation.

The researchers also found that in all 5 jurisdictions these restrictions apply not to the entire group but to the legal entity that directly issues the stablecoin. As a result, other affiliates within the same corporate group could still operate businesses the issuing entity cannot.

In this environment, institutionalising stablecoins is moving beyond the question of whether to allow them and into a stage that also weighs issuers, the scope of concurrent businesses and financial stability effects. The BIS acknowledges the potential for stablecoins to reduce costs, but it continues to raise concerns about the impact on bank funding, monetary policy and regulatory enforcement if they spread widely as payment infrastructure.