The foundation of the global monetary system relies on central bank money anchoring trust and maintaining the singleness of currency, Bank for International Settlements (BIS) general manager Pablo Hernández de Cos told delegates at the Jackson Hole Economic Symposium on Friday.
Delivering a speech on the evolution of digital finance, Hernández de Cos warned that while technological innovations such as distributed ledger technology and tokenisation offer solutions to current market frictions, non-bank digital assets like stablecoins present structural risks to financial stability.
Comparing stablecoins with tokenised bank deposits, Hernández de Cos noted that current stablecoin models fail to uphold the core properties of money—specifically singleness, interoperability, and financial integrity. Because stablecoins trade as bearer-like instruments across fragmented, public blockchains without automatic par-redemption mechanisms, value deviations in secondary markets are common, particularly during periods of stress.
“There is no mechanism that enforces singleness,” Hernández de Cos said. “By contrast, tokenised deposits are account-based bank liabilities recorded on a programmable platform. Settlement in central bank money preserves singleness, under which claims denominated in that unit are redeemable at par.”
The BIS chief outlined potential balance sheet risks if stablecoins scale significantly. Depending on whether issuers back their tokens with wholesale bank deposits, short-dated government bills, or central bank reserves, widespread adoption could drain retail funding from commercial banks. A shift toward wholesale liabilities would raise marginal funding costs, tighten credit conditions, and disproportionately impact lending to small businesses.
Additionally, the reliance of stablecoin issuers on narrow sets of liquid assets leaves them vulnerable to run risks, which could trigger fire sales and spill into core money markets. On compliance, Hernández de Cos highlighted ongoing anti-money laundering enforcement challenges on pseudonymous public ledgers, noting that most stablecoin balances remain in self-custodied wallets outside traditional onboarding checks.
To capture the benefits of tokenisation, the BIS advocates integrating the technology directly into the existing two-tier banking architecture. Under this model, tokenised deposits would handle commercial payments and wholesale settlement, underpinned by central bank reserves to guarantee par exchange.
Hernández de Cos acknowledged that market adoption of tokenised deposits remains in its early stages, citing operational, governance, and legal friction points that must be resolved. Key hurdles include overcoming fragmented platforms through unified ledger architectures, clarifying settlement finality for smart contracts, and ensuring equitable access for smaller banking institutions.
He pointed to public-private initiatives such as Project Agorá, which is testing cross-border settlement of tokenised commercial bank deposits against central bank money, as evidence of progress.
Looking ahead, Hernández de Cos suggested that stablecoins and tokenised deposits could coexist if their operational boundaries are strictly defined. Tokenised deposits would manage day-to-day transaction volumes and interbank settlement, while stablecoins could be confined to niche applications, such as decentralized finance lending pools, under strict regulatory regimes enforcing par redemption.
To navigate the transition, central banks must focus on anchoring singleness by enabling access to central bank liquidity on tokenised platforms, enhancing cross-border technical standards to combat illicit finance, and monitoring how non-bank money adoption impacts bank credit supply and monetary policy pass-through.
“Tokenisation offers real gains: programmability, atomic settlement and around-the-clock operations,” Hernández de Cos concluded. “But the path to the future monetary system lies in improving the old while enabling the new.”
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