Hernández de Cos rejects blanket insurance for deposit-like money
Pablo Hernández de Cos, General Manager of the Bank for International Settlements (BIS), said deposit-like products do not automatically warrant deposit insurance. Tokenised bank deposits retain a rationale for protection that stablecoins lack.
Same technology, different protection
Speaking at the International Association of Deposit Insurers (IADI) conference in Berlin, Hernández de Cos distinguished tokenised deposits from asset-backed stablecoins.
Bank deposits support credit provision and payments; insurance mitigates the runs associated with maturity and risk transformation.
Tokenised bank deposits preserve that credit link, supporting equivalent protection, despite reimbursement complexities.
Stablecoins lack the same credit-intermediation rationale and have not maintained stable fiat values.
Runs can nevertheless transmit stress through reserve-asset sales and withdrawals from banks.
He cited asset safeguards, capital and enforceable holder claims as alternatives to insurance; a 2025 Financial Stability Board review found implementation gaps.
Beyond reimbursing failed-bank depositors
Over 80 percent of IADI members have mandates extending beyond payouts into resolution, according to its 2026 Global Trends Report.
European Union Crisis Management and Deposit Insurance reforms adopted in 2026 expand deposit-insurance funding for transfer-based resolutions of smaller banks.
Internal loss-absorbing capacity remains the primary resolution resource for systemic banks, but can prove insufficient or be depleted before failure.
For smaller banks, business-model constraints reinforce the role of industry-funded external resources.
Protection needs a public-interest test
Deposit-like functionality alone does not justify deposit insurance, Hernández de Cos argued.
Faster digital runs, cyber incidents and non-bank contagion require stronger crisis preparedness and coordination.
Any extension of protection must rest on social value, with clear communication about what remains uninsured.