Bank for International Settlements general manager Pablo Hernández de Cos called for stronger global coordination on stablecoins, warning that US dollar-pegged tokens could have “material consequences” for financial stability and economic policy if they scale to rival traditional money.
Speaking at a Bank of Japan seminar in Tokyo, he said current stablecoin structures fall short of the standards required for a widely used payment method, despite offering faster cross-border transfers and compatibility with smart contracts.
De Cos noted that leading dollar-backed stablecoins such as Tether (USDT) and USD Coin (USDC) behave more like investment products than cash equivalents. He pointed to redemption fees, restrictions in primary markets, and instances where prices deviate from their dollar peg in secondary trading.
He argued these features make stablecoins resemble exchange-traded funds, while still exposing markets to run and contagion risks. Because issuers typically hold reserves in short-term government debt and bank deposits, a wave of redemptions during stress periods could force asset sales into already fragile markets or transmit funding pressure to banks.
The remarks come as regulators worldwide continue debating how best to oversee the rapid growth of stablecoins and other tokenized money-like instruments.
Pablo Hernández de Cos also warned that the use of public, permissionless blockchains and unhosted wallets places a significant portion of stablecoin activity outside traditional Anti-Money Laundering and Counter-Terrorism Financing frameworks. This, he said, could make stablecoins more attractive for illicit use unless targeted safeguards are applied at entry and exit points.
Europe tightens its stance on stablecoins
The comments come as European policymakers move to strengthen oversight of non-euro stablecoins and similar tokenized instruments.
Earlier this month, Denis Beau of the Bank of France urged the European Union to go beyond its Markets in Crypto-Assets Regulation by restricting the everyday use of non-euro stablecoins and tightening issuance rules across jurisdictions to limit regulatory arbitrage during periods of stress.
At the same time, the European Central Bank has compared euro-denominated stablecoins with tokenized money market funds, noting that while both involve liquidity transformation and carry run risk, they differ in transparency, liquidity management and regulatory oversight — factors that influence how stress spreads through funding markets.
Other major jurisdictions are also reassessing their approaches. In the United Kingdom, members of the House of Lords questioned Coinbase in March over whether stablecoins could drain bank deposits, trigger runs similar to the Silicon Valley Bank collapse and facilitate illicit activity, as authorities finalize rules for fiat-backed tokens.
Meanwhile, in Switzerland, UBS and several domestic institutions launched a pilot for a Swiss franc-denominated stablecoin on April 8 within a regulatory sandbox, aiming to explore blockchain-based payments while keeping the system anchored within regulated finance.
