Pablo Hernández de Cos, general manager of the Bank for International Settlements, told central bankers at the Jackson Hole Economic Policy Symposium on August 28 that stablecoins do not yet meet the foundational requirements to function as real money at scale. Speaking at the Federal Reserve Bank of Kansas City's annual retreat, de Cos positioned tokenized deposits as the superior alternative for digital payments.
De Cos identified four specific shortcomings in stablecoins: lack of par redeemability, insufficient elasticity, poor interoperability across blockchains, and financial integrity concerns. He explained that these gaps mean stablecoin issuers cannot guarantee one-to-one cash redemption like bank deposits, supply cannot expand and contract with economic activity, tokens move poorly between competing blockchains, and self-custodied wallets complicate anti-money-laundering enforcement.
Tokenized deposits, according to de Cos, offer a more direct path to harness tokenization while preserving the monetary system's foundations. These account-based bank liabilities settle through central bank reserves and maintain what he called the "singleness" of money that stablecoins cannot guarantee.
The timing of de Cos's remarks coincides with significant growth in the stablecoin market. Global stablecoin supply reached $308 billion as of August, representing a year-over-year increase of more than 14 percent despite a pullback from a May peak. Tether's USDT accounts for approximately 60 percent of that total.
De Cos also raised concerns about dollar-pegged stablecoins potentially affecting monetary sovereignty in some jurisdictions and suggested that steering stablecoin activity toward U.S. Treasuries could influence government borrowing costs.
