Pablo Hernández

Pablo Hernández de Cos, General Manager of the Bank for International Settlements, said Monday that stablecoins present both “opportunities and challenges,” urging coordinated efforts to move forward.

The Pros And The Cons

In a speech at a Bank of Japan seminar, Hernández de Cos highlighted the potential of stablecoins to improve cross-border payments and provide “convenient access” to the dollar and other foreign currencies. He also praised their instant settlement and simultaneous settlement capabilities.

“On the other hand, stablecoins pose significant macroeconomic and financial challenges, including their potential effects on credit supply, financial stability and monetary and fiscal policy, ” Hernández de Cos emphasized.

He particularly stressed their potential to enable “regulatory circumvention” and drive increased dollarization in emerging economies.

The Strategy Ahead

Hernández de Cos called for “coordinated progress” along two dimensions.

First, he proposed policy measures, such as guaranteeing redemption through robust regulation and supervision, implementing protections for coin holders, and considering access to central bank liquidity under “strict safeguards.”

Hernández de Cos then suggested incorporating the technological advancements of stablecoins into the existing two-tier financial system. He noted that central banks are investigating the use of tokenised deposits

“Central bank money can serve as an anchor of trust, helping to mitigate the fragmentation and integrity risks that would arise in a purely decentralised monetary system,” said the top executive of the “bank of central banks.”

Progress And Bottlenecks

In recent months, U.S. policymakers and experts have been increasingly advocating for clear laws to oversee the rapidly expanding stablecoin market.

The GENIUS Act, signed by President Donald Trump in July 2025, is a landmark legislation establishing the first federal regulatory framework for payment stablecoins.

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

Photo Courtesy: Funtap on Shutterstock