The Bank for International Settlements has questioned whether stablecoins can function as money, warning that structural weaknesses, limited real-world use and financial integrity risks could constrain their role in the global financial system.
Stablecoins in their current form fall short of functioning as money, according to the General Manager of the Bank for International Settlements (BIS). This has raised fresh doubts over their ability to scale beyond niche use cases despite rapid growth across crypto markets.
Speaking at a seminar hosted by the Bank of Japan today (20 April), Pablo Hernández de Cos said that while stablecoins offer technological advantages, they lack the core characteristics required of a widely accepted means of payment.
“As I will stress, stablecoins have several potential use cases and offer attractive technological features which can enable integration with smart contracts and faster cross-border payments,” he said. “However, the market remains small, and structural features… constrain their moneyness.”
Central to de Cos’ argument is the concept of “moneyness” — the degree to which an asset can reliably function as a means of payment.
He pointed to two defining features: “singleness”, where different forms of money are interchangeable at par, and interoperability across systems. On both counts, stablecoins fall short.
“Without settlement in – or an undisputable backing by – central bank money, payments at par are not assured,” he said, noting that deviations from face value, while often small, can widen during periods of stress.
He added that fragmentation across blockchain networks further undermines their usefulness, with assets and liquidity spread across incompatible systems.
In this environment, the BIS suggested that stablecoins more closely resemble financial instruments than money itself. “They currently operate more like exchange-traded funds than like money,” de Cos said.
Limited role beyond crypto markets
De Cos also challenged the narrative that stablecoins are already reshaping payments. While transaction volumes reached around $35 trillion in 2025, he noted that activity tied to real-world payments remains marginal.
Payment-related flows were estimated at roughly $390 billion over the same period, a fraction of traditional payment system volumes. Instead, stablecoins continue to be used primarily within the crypto ecosystem, acting as collateral and liquidity tools for trading rather than as everyday payment instruments.
“Stablecoins have found limited commercial use, such as for firms’ payments within global value chains,” de Cos said, adding that their role as a mainstream payment method remains constrained.
Beyond functionality, the de Cos placed particular emphasis on financial crime risks.
“I see this as the major concern regarding stablecoins,” de Cos said, pointing to their circulation on public blockchains and the use of unhosted wallets, which often fall outside traditional regulatory frameworks.
The absence of standardised identity checks, combined with the global and decentralised nature of blockchain infrastructure, was cited as a challenge for anti-money laundering and counter-terrorism financing efforts.
While some issuers have taken steps to freeze illicit funds, the BIS warned that enforcement remains reactive, with bad actors continuing to find ways to move assets undetected.
Pressure on banks and credit provision
De Cos also outlined how widespread adoption of stablecoins could reshape the banking system.
A shift away from deposits towards stablecoins could force banks to rely more heavily on wholesale funding, increasing costs and potentially reducing lending capacity.
“If firms and households shifted from bank deposits to stablecoins at scale, banks would increasingly rely on wholesale funding, which is costlier and potentially less stable,” de Cos said.
Such changes could have knock-on effects for credit availability and financial stability, particularly if lending activity shifts further towards non-bank institutions.
Despite acknowledging the technological advances behind stablecoins, the de Cos maintained the foundations of money remain tied to public institutions. “Stablecoins seek to leverage trust in fiat currency,” de Cos said. “This underscores that the monetary anchor provided by central banks remains indispensable.”
He reiterated its support for integrating elements of tokenisation within the existing financial system, rather than replacing it, pointing to ongoing work on initiatives such as unified ledgers and tokenised deposits.
