BIS Calls for Enhanced Global Regulation of Stablecoins

The Bank for International Settlements (BIS) has urged for stronger global regulatory cooperation on stablecoins to prevent significant market fragmentation. According to Foresight News, BIS General Manager Pablo Hernandez de Cos emphasized the need for unified regulations during a speech in Japan. Currently, the global circulation of stablecoins is approximately $315 billion, with Tether and Circle accounting for about 85% of the market. Hernandez de Cos highlighted the risks associated with stablecoins, including their potential to undermine monetary and fiscal policies, create market stress, and facilitate illegal financing. He noted that stablecoins operate more like exchange-traded funds (ETFs) rather than traditional currencies. He warned that regulatory differences across jurisdictions could lead to regulatory arbitrage. To mitigate the risk of runs, Hernandez de Cos suggested measures such as granting issuers access to deposit insurance or central bank lending facilities. Additionally, he proposed prohibiting interest payments on stablecoins to reduce the flow of bank deposits into these digital assets.