The head of the Bank for International Settlements has said tokenisation, not today’s stablecoins, is the development most likely to reshape cross‑border payments and financial markets.
Speaking at the Bank of Japan on 20 April, BIS general manager Pablo Hernández de Cos said tokenisation — “the digital representation of assets on a programmable platform” — could pave the way for new arrangements in payments and securities markets.
He said stablecoins incorporate some of these advances, including programmability and atomic settlement, which allow actions to “execute automatically when predefined conditions are met” and ensure delivery and payment occur simultaneously.
But he noted that stablecoins remain small and narrowly used. Market capitalisation stood at around $315bn in early April, compared with $8tn in US bank deposits. Payment‑related flows in 2025 were estimated at $390bn, a fraction of traditional payment volumes.
Most activity, he said, is concentrated in on‑chain trading and offshore access to the US dollar. Around 98% of stablecoins are dollar‑denominated. Even in jurisdictions with clear rules, adoption has been limited. Yen‑pegged stablecoins represent “less than 0.01%” of the size of US dollar‑pegged coins.
Hernández de Cos said design choices also constrain their usefulness. Major issuers impose redemption frictions, leading to deviations from par that make them resemble exchange‑traded funds rather than money.
He argued that stablecoins fall short of two core properties of money: singleness and interoperability. Because they do not settle in central bank money, “payments at par are not assured”. Public blockchains also fragment liquidity across chains and layers, meaning the same token is not inherently interoperable across networks.
These features “undermine the network effects that are key to money”, he said. Bridges designed to connect chains introduce additional risks, while public blockchains expose stablecoins to operational and cyber vulnerabilities at the level of validators and consensus mechanisms.
If adoption were to grow, he warned of wider macro‑financial effects. Large shifts from deposits into stablecoins could push banks towards costlier wholesale funding. Runs could trigger fire sales of reserve assets, including government bonds, and transmit stress to banks.
He called financial integrity “the major concern”, noting that unhosted wallets and permissionless blockchains weaken AML/CFT controls. Some estimates suggest stablecoins now account for most illicit transactions within the crypto ecosystem.
FX‑denominated stablecoins could also accelerate dollarisation in emerging markets, weaken monetary transmission and make capital flows more volatile. Stablecoins could facilitate evasion of capital controls, he said, because cross‑border transfers often occur outside the regulating jurisdiction.
Despite the innovation underway, Hernández de Cos said stablecoins ultimately “seek to leverage trust in fiat currency”. He stressed that the monetary anchor provided by central banks “remains indispensable – regardless of the future role of stablecoins or any other technological innovation”.
Hernández de Cos’s comments echoed those from JPMorgan Chase chairman and CEO Jamie Dimon. Speaking at GIC Insights 2025, Dimon said that while stablecoin transaction volumes are substantial, the majority of activity was driven by speculative trading rather than genuine commercial transactions.
