Bank for International Settlements (BIS) chief Pablo Hernández de Cos warned on August 28, 2026, that stablecoins do not credibly function as a means of payment at scale, and that their continued growth could push bank funding costs higher and ultimately make loans more expensive for ordinary borrowers.
What the BIS Chief Said
Speaking at the Federal Reserve’s Jackson Hole Economic Policy Symposium, de Cos, general manager of the BIS and a candidate to succeed Christine Lagarde as European Central Bank (ECB) President next year, argued that tokenized deposits offer a more compelling path to capturing tokenization’s benefits than stablecoins do.
He said the two instruments could coexist, but that tokenized deposits should handle the bulk of everyday payments while stablecoins serve more specialized roles.
He acknowledged stablecoins could lower sovereign borrowing costs, but warned that bank funding costs could rise as deposits are channeled away from lenders, potentially leaving ordinary borrowers paying higher rates.
He also argued stablecoins break what he called the “singleness” of money, since customers cannot move between different stablecoin products without effectively selling and buying at a cost, and said stablecoin platforms lack real interoperability with one another.
He raised money-laundering concerns too, arguing that controls are difficult to apply consistently across stablecoin platforms.
The BIS chief went further on a geopolitical dimension specific to dollar-pegged stablecoins. “The growing adoption of dollar-pegged stablecoins has also raised concerns in some jurisdictions about monetary sovereignty and the potential for digital dollarization,” he said.
If borrowers outside the United States increasingly turn to dollar-based stablecoins, he warned, it could erode monetary sovereignty in those countries, weaken domestic monetary policy transmission, and tie local financial conditions more closely to US policy decisions.
“Tokenized deposits offer a more direct path to harness tokenization while preserving the monetary system’s foundations,” de Cos said, while acknowledging that tokenized deposits still need to resolve their own open questions around interoperability, governance, and legal issues, including settlement.
This view sits in direct tension with the position US Treasury Secretary Scott Bessent has taken publicly, describing stablecoins as a digital revolution that could help cement the dollar’s position as the world’s leading reserve currency and generate demand for trillions of dollars in US Treasuries.
De Cos did not dismiss that argument outright, but he weighed it against what he sees as more significant risks to bank funding and monetary sovereignty.
Why Banks Are Taking This Seriously
Arthur Firstov, Chief Business Officer at Mercuryo, said stablecoins have stopped functioning as a niche crypto product and become a payments product instead. “For years banks could wave it off as crypto infrastructure, that is a much harder line to hold when stablecoins are being used for payments, treasury, cross-border settlement, cards, merchant payouts, and institutional settlement,” Firstov said.
“At that point they are competing directly with one of the most valuable products a bank has, the transaction account.”
A Federal Reserve survey from September 2025 found roughly half of respondents were prioritizing growth in at least one stablecoin or digital-asset area over the following three years, and more than 40 banks are now reportedly preparing their own stablecoin launches.
Nitin Gaur, Head of Institutions at Nethermind, drew a precise distinction between two products that can look similar on the surface but function very differently on a bank’s balance sheet. “A tokenized deposit and a bank-issued stablecoin are two different liabilities with different legal character, different capital treatment, different insurance status and different settlement properties,” Gaur said.
A tokenized deposit remains bank funding that can support lending. A stablecoin issued under the GENIUS Act’s regulatory pathway, by contrast, must be backed at least 1:1 by eligible reserves such as cash or short-dated Treasuries, reserves the issuer cannot lend against.
As Gaur put it, “When a treasurer moves a hundred million from a demand deposit into the bank’s own coin, the bank has converted a funding source into a matched, non-lendable reserve pool.”
Adrian Wall, Managing Director of the Digital Sovereignty Alliance, framed the broader risk in similar terms to de Cos, though as his own separate assessment. “If stablecoin adoption ultimately shifts funding away from bank deposits rather than recycling those funds back into the banking system, banks could face higher funding costs and potentially less capacity to extend credit,” Wall said.
How Banks Are Responding
Banks are not standing still. JPMorgan’s JPM Coin represents a bank deposit recorded on a blockchain, while Société Générale-FORGE’s CoinVertible is a separate, MiCA-regulated stablecoin backed by segregated collateral, illustrating how similar-looking technology can carry very different legal promises to customers depending on its structure.
In July, Citi reported completing a dollar payment from London to Thailand over a US holiday weekend using its tokenized-deposit service alongside round-the-clock clearing.
Moreover, Western Union also launched a stablecoin called USDPT in May, with Anchorage Digital Bank issuing it on Solana.
JPMorgan reports around $7 billion in daily activity across its Kinexys products, while CoinVertible reported €156.6 million in euro tokens and $12.55 million in dollar tokens outstanding as of August 31.
Thirty-Seven Banks, One Coin
As more individual banks launch their own separate stablecoins, money risks scattering across smaller, less liquid pools, forcing users to exchange one bank’s token for another and exposing them to the risk that conversion may not hold at face value during periods of market stress.
Europe’s Qivalis has taken a different approach, assembling 37 banks across 15 countries behind a single planned euro stablecoin, targeting a launch in the second half of 2026 subject to regulatory authorization.
Ernesto Olmedo Pereira, Head of Strategy and DeFi at Qivalis, said the shared structure was a deliberate choice. “If every bank launches its own token, you get dozens of thin, incompatible pools instead of one deep, liquid euro instrument,” Pereira said.
“Qivalis, an independent company backed by 37 banks, exists precisely because the banks behind it decided to build one shared, interoperable euro rail together rather than compete with 37 separate ones.”
Under this model, individual banks would compete through services built around the shared currency, such as foreign exchange and corporate lending, rather than through the payment rail itself.
What Comes Next
Whether stablecoin growth really raises borrowing costs depends heavily on where the underlying reserves end up. Money that returns to the banking system through other channels can still fund lending, even if it becomes more concentrated among fewer institutions and moves more quickly during periods of stress.
Qivalis’s planned launch will serve as an early test of whether bank cooperation on shared infrastructure can attract business beyond its own founding members, while individual banks pursuing their own stablecoins will need to demonstrate that the services built around those payments justify any increase in their own cost of funding.
What this means for you: the stablecoin market’s growth to roughly $304 billion has moved this from an abstract policy debate into a live question about bank funding costs, and the eventual outcome will depend less on any single institution’s stablecoin launch than on whether the reserves backing these tokens circulate back into the banking system or drain away from it permanently.
