Stablecoins not credible for payments at scale, BIS chief says

Bank for International Settlements chief Pablo Hernández de Cos has cast doubt on the viability of stablecoins for large-scale payments, suggesting tokenized bank deposits as a more promising alternative. The BIS chief's comments come amid growing regulatory scrutiny of stablecoins worldwide. A new Financial Stability Institute (FSI) study highlights significant differences in how major markets regulate stablecoin issuers, with the US and Singapore taking a more restrictive approach compared to the UK, EU, Hong Kong and Singapore.

De Cos acknowledged that stablecoins could potentially help reduce government borrowing costs, a point also raised by US Treasury Secretary Scott Bessent. However, he warned that this could negatively impact consumers, as banks might face higher funding costs and pass these on to households and businesses through increased borrowing rates.

He also raised concerns about limited interoperability between stablecoin platforms and challenges in applying anti-money laundering controls consistently across different systems. De Cos' remarks emphasize the need for regulators to address the challenges posed by stablecoins as they gain wider acceptance, particularly in terms of interoperability, AML compliance, and the potential impact on monetary sovereignty and domestic monetary policy.