preferred on
Points of Focus
- UK ministers want Bank of England rules supporting stablecoin payment innovation.
- The BIS chief said stablecoins still lack core properties of reliable money.
- Tokenized deposits remain the BIS-preferred model for scaling digital payments safely.
The UK government is pushing the Bank of England to give stablecoins and other forms of digital money more room to develop, just as the head of the Bank for International Settlements warned that stablecoins still cannot function reliably as money at scale.
HM Treasury said on Aug. 27 that it plans to give the Bank of England a new secondary objective to support innovation in payment systems, including systems using stablecoins and other digital settlement assets.
Financial stability would remain the central bank’s primary objective, but regulators would also have to consider whether their rules create appropriate conditions for new payment technologies to develop.
The policy shift strengthens the UK’s effort to develop a competitive stablecoin market after years of criticism that its approach was moving more slowly than the US and European Union.
But one day later, BIS general manager Pablo Hernández de Cos delivered a considerably more cautious assessment at the Jackson Hole Economic Symposium.
JUST IN: The BIS says stablecoins aren't credible as money at scale, but its own argument highlights why governments are paying attention.
Stablecoins could lower government borrowing costs while draining bank deposits and weakening central banks’ control.
The battle over… pic.twitter.com/GvWB70XWhg
— CryptosRus (@CryptosR_Us) August 29, 2026
BIS says stablecoins cannot yet scale as everyday money
De Cos argued that stablecoins remain an unreliable foundation for large-scale payments because they struggle to provide several characteristics expected of money.
He cited potential instability, fragmentation between different issuers, weak interoperability, difficulties enforcing financial integrity rules, and risks to monetary sovereignty. These problems can become particularly severe when dollar-denominated stablecoins circulate extensively outside the United States.
The BIS has previously argued that money needs to provide singleness, meaning one unit should reliably exchange at par with another, alongside elasticity and financial integrity. Stablecoins can deviate from their pegs or exist across fragmented networks with varying backing and redemption structures.
De Cos also challenged one of the economic arguments supporting stablecoin expansion.
Stablecoin issuers buying US government debt could increase demand for Treasury bills and potentially lower sovereign borrowing costs. But if deposits migrate from banks into stablecoins, banks could lose a source of comparatively cheap funding, potentially raising borrowing costs for households and businesses.
His preferred alternative is tokenized commercial bank deposits, which can incorporate programmable blockchain-style functionality while remaining within the existing two-tier monetary system anchored by central bank money.
UK is moving toward regulated stablecoins anyway
Britain is taking a more accommodating position without abandoning those financial-stability concerns.
The Bank of England published draft rules for systemic sterling stablecoins in June, saying properly regulated tokens could support faster, cheaper and more flexible payments, including cross-border transactions and programmable payments.
The government and bank have also been adjusting earlier proposals after industry concerns that restrictions could make sterling stablecoins commercially unattractive.
The UK has gone further in other areas. In July, Britain and the US issued a joint statement describing well-regulated stablecoins as capable of increasing competition, modernizing financial infrastructure, and improving cross-border payments.
The government and BIS are not necessarily arguing over whether tokenization has value; they disagree more sharply over which form of digital money should ultimately dominate.
Britain is preparing a framework where regulated stablecoins can compete and scale alongside bank money. The BIS remains convinced that tokenized deposits anchored to the banking system offer a safer foundation.
That debate is becoming increasingly practical as governments move from stablecoin consultations toward live regulatory regimes, forcing policymakers to decide whether privately issued tokens should become everyday money or remain a specialized layer around the banking system.
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