Hernández de Cos urges tokenised deposits over stablecoins
BIS General Manager Pablo Hernández de Cos warned at the Jackson Hole symposium on August 28, 2026, that stablecoins fail to uphold the singleness of money. He urged central banks to anchor programmable finance in tokenised deposits and central bank reserves.
The par redemption deficit
Speaking at Jackson Hole, Pablo Hernández de Cos highlighted structural weaknesses in fiat-referenced stablecoins, notably their inability to guarantee par redemption across fragmented, permissionless blockchains.
Transactions between different stablecoins require secondary market sales that deviate from par during market stress.
Furthermore, most stablecoin balances sit in self-custodial wallets outside know-your-customer frameworks, complicating anti-money laundering enforcement.
By contrast, tokenised deposits represent account-based commercial bank liabilities settled atomically in central bank reserves, preserving the singleness of money while operating inside established prudential perimeters.
Wholesale funding shifts the credit channel
Stablecoin expansion alters bank funding channels depending on reserve asset composition.
Backing tokens with wholesale deposits raises banks' marginal funding costs and squeezes credit to small businesses.
Investing reserves in government bills lowers short-term yields, while central bank reserve holdings risk draining liquidity from commercial lenders.
Hernández de Cos pointed to Project Agorá, which tests atomic cross-currency settlement, as a working model for interoperable tokenised deposits.
Sound anchors beat speculative rails
The BIS makes a necessary push to steer digital finance away from volatile private stablecoins toward regulated banking rails.
However, tokenised deposits still lack live cross-border infrastructure, leaving central banks with blueprints rather than operational realities.
Without rapid execution, private issuers will entrench their market lead.