The Bank for International Settlements (BIS) is renewing its criticism of stablecoins, questioning their credibility as everyday money at a time when governments worldwide are building regulatory frameworks around the tokens.

BIS General Manager Pablo Hernández de Cos — a candidate to succeed European Central Bank President Christine Lagarde next year — argued that stablecoins do not credibly function as a means of payment at scale. He said tokenized bank deposits offer a stronger alternative, Reuters reported on Friday. Tokenized deposits are digital representations of commercial bank money on programmable ledgers, keeping payments within the regulated banking system rather than through privately issued tokens.

"Tokenised deposits offer a more direct path to harness tokenisation while preserving the monetary system's foundations," de Cos said.

The comments come as regulators worldwide grapple with stablecoin adoption, while a new study from the BIS-linked Financial Stability Institute (FSI) shows significant differences in how major markets regulate stablecoin issuers. The BIS, an umbrella body for the world's central banks based in Basel, has long positioned itself as a skeptic of privately issued crypto tokens while promoting central bank and tokenized bank money alternatives — making de Cos's remarks a continuation of that institutional stance.

Stablecoins could lower government borrowing costs

Hernández de Cos acknowledged that stablecoins could lower government borrowing costs, an argument also made by US Treasury Secretary Scott Bessent. The argument rests on stablecoin issuers holding large reserves of short-term government debt to back their tokens, potentially boosting demand for Treasuries.

However, the effect could cut both ways for consumers. If customers move bank deposits into stablecoins, banks could face higher funding costs and pass those expenses on to households and businesses through higher borrowing rates, Hernández de Cos said.

He also pointed to limited interoperability between stablecoin platforms and difficulties consistently applying anti-money laundering controls. Growing use of US dollar-pegged stablecoins outside the US could also undermine monetary sovereignty and weaken domestic monetary policy, he added.

Related: Visa works with Upbit parent on stablecoin payments, AI commerce

Stablecoin issuers face different rules worldwide

The FSI study, published on Thursday, compared stablecoin regulations in the US, European Union, United Kingdom, Hong Kong and Singapore. It found substantial differences in which entities may issue stablecoins and what other business activities they can conduct.

The US and Singapore take relatively restrictive approaches toward non-bank issuers. Under the US GENIUS Act, a federal stablecoin framework signed into law in July 2025, lending, staking, proprietary trading and custody of third-party crypto assets generally fall outside the activities permitted for payment stablecoin issuers.

Hong Kong, the UK and the EU take a less restrictive approach, allowing some additional activities with separate authorization, regulatory consent or other applicable permissions.

The researchers also found that restrictions across all five jurisdictions apply to the issuing entity rather than the wider corporate group — meaning other group members can conduct activities that the stablecoin issuer itself cannot. The divergence highlighted by the study points to a live question for global markets: whether fragmented national regimes encourage regulatory arbitrage or eventually converge as issuers operate across borders.