BIS Official Urges Coordination on Stablecoins

Pablo Hernández de Cos, general manager of the Bank for International Settlements, called on Monday for greater international coordination to address the opportunities and risks posed by stablecoins, warning that without unified efforts, they could fragment global markets and undermine financial stability. Speaking at a Bank of Japan seminar in Tokyo, Hernández de Cos described stablecoins, digital assets typically pegged to the U.S. dollar, as a double-edged sword in the evolving financial landscape.

Stablecoins offer clear benefits, Hernández de Cos noted, including faster cross-border payments, instant settlement, and easier access to foreign currencies like the dollar. These features could enhance efficiency in global transactions and integrate with technologies such as smart contracts. However, he emphasized their potential drawbacks, which extend to macroeconomic stability, monetary and fiscal policy transmission, and the risk of regulatory circumvention. In emerging economies, widespread adoption could accelerate dollarization, eroding local currencies and diminishing central banks' control over inflation and money supply. Officials have also raised concerns about...