Pablo Hernandez de Cos, general manager of the Bank for International Settlements, has urged global financial leaders to build digital monetary systems around tokenized bank deposits rather than stablecoins.
Speaking on September 1, 2026, the head of the international institution warned that stablecoins are not yet ready to serve as a reliable payment mechanism for the global economy.
Hernandez de Cos said tokenized deposits offer a more direct path toward using tokenization while preserving the fundamental foundations of the monetary system.
The Bank for International Settlements, based in Basel, Switzerland, serves as an international organization for central banks to foster global monetary and financial cooperation. Tokenized bank deposits represent digital claims on commercial bank balances maintained on distributed ledger technology, integrating traditional banking security with modern digital efficiency.
Stablecoin risks and global impact
While acknowledging that stablecoins have gained widespread adoption in recent years, Hernandez de Cos expressed strong doubts about their capacity to function effectively as money during mass usage. He identified significant risks to financial stability, poor interoperability between different token networks, and severe difficulties in monitoring compliance with anti money laundering regulations.
The BIS chief highlighted a specific danger for nations outside the United States. He explained that the widespread adoption of stablecoins pegged to the US dollar could undermine the ability of national central banks to control domestic monetary policy, leaving local economies increasingly exposed to foreign financial decisions.
Stablecoins are private digital currencies designed to maintain a stable exchange value by pegging their price to traditional fiat currencies or commodities. While proponents view them as rapid payment vehicles, central bankers remain concerned about liquidity backing, settlement risks, and regulatory oversight.
Hernandez de Cos noted that the BIS does not call for a complete ban on stablecoins. He suggested that stablecoins tied to national currencies could still perform specialized or niche tasks, but argued that everyday retail and commercial transactions should be structured around tokenized deposits.
Regulatory challenges and next steps
Significant hurdles remain before tokenized deposits can be deployed at scale. Hernandez de Cos pointed out that no major international system currently exists where multiple banks across different jurisdictions can process tokenized deposits on a single compatible infrastructure. He stressed that overcoming these barriers requires solving complex technical compatibility issues alongside governance frameworks and cross border legal regulations.
The comments come as financial regulators around the world tighten their scrutiny of digital asset issuers. The New York State Department of Financial Services recently proposed strengthening requirements for companies that issue stablecoins, seeking to update rules introduced last year that govern the issuance and circulation of fiat backed tokens.
The New York State Department of Financial Services regulates state chartered banking institutions and virtual currency entities operating within New York, establishing influential compliance benchmarks across the global financial sector.
