The Bank for International Settlements (BIS) has backed tokenised deposits as a stronger foundation for future payments than stablecoins.
BIS General Manager Pablo Hernández de Cos outlined the position at the Jackson Hole Economic Symposium on 28 August.
Tokenised deposits could enable programmable payments while remaining connected to central bank money.
This would help ensure they remain redeemable at face value.
By contrast, Hernández de Cos said stablecoins “do not yet uphold the foundational properties of money”.
Transfers between tokens such as USDT and USDC may require secondary market trades where prices can deviate from their intended value, particularly during market stress.
Stablecoins also operate across fragmented blockchains and are often held in self-custodied wallets, making anti-money laundering checks harder to enforce.
Stablecoin Growth Could Affect Bank Lending
Wider adoption could raise bank funding costs, restrict lending and expose financial markets to runs.
The impact would depend on whether issuers hold reserves in bank deposits, government securities or at central banks.
Tokenised deposits would keep funds within the banking system and preserve the link between deposits and lending.
However, separate bank-operated networks could limit interoperability and favour larger institutions.
No interoperable tokenised deposit network currently spans multiple banks and jurisdictions.
Wider adoption would require common technical standards, clear governance, legal certainty and stronger cybersecurity.
Central banks and financial institutions are testing tokenised cross-border wholesale payments through the BIS-led Project Agorá. Both instruments could eventually coexist.
Tokenised deposits could support most everyday payments and wholesale settlements, while stablecoins may serve specialised uses under stronger safeguards.
The BIS also warned that growing demand for US dollar-backed stablecoins could weaken monetary sovereignty in some countries.
Featured image: Edited by Fintech News Singapore, based on image by jbstyle via Magnific
