Ex-BIS Carsten says stablecoins can crash the fiat after-party — if regulators show up 🪙

Agustín Carstens, former general manager of the Bank for International Settlements and a member of the Global Finance & Technology Network's international advisory board, said Tuesday that stablecoins can promote financial inclusion, innovation and lower costs, and called for conditions allowing fiat money and stablecoins to coexist. "I have come to appreciate what stablecoins can do to promote financial innovation, inclusion and to reduce costs," Carstens said in a welcome address at the Point Zero Forum. "We should try to establish conditions where we can live with fiat money and stablecoins."

The remarks marked a softer stance than Carstens took during his tenure at the BIS, where he was among the most prominent critics of the crypto sector. In a January 2022 speech, he said stablecoins may not function as "sound money" because issuers have incentives to invest reserve assets in a "risky manner" to generate returns. In one of his final speeches as BIS general manager in June 2025, Carstens warned that stablecoins could emerge as a source of liquidity risk and still fell short of three key tests money must fulfill to serve society.

While Carstens has warmed to the asset class, current BIS leadership has not. His successor, current BIS general manager Pablo Hernández de Cos, said in April that the stablecoin market remains "small" and that its structural features constrain its ability to function as money. The BIS reiterated that view in a preview released Tuesday ahead of its Annual Economic Report 2026, arguing that current stablecoin designs fall short of key properties that underpin trust in money and warning that widespread adoption could create challenges for financial stability, bank funding and monetary sovereignty. The BIS also endorsed bringing tokenization into the two-tier banking system, saying digital representations of assets could enable new forms of programmable finance while preserving trust in money.

Carstens said a coordinated global regulatory framework is needed to strengthen trust in stablecoin issuers. "If we really want a global system where stablecoins can interact with global currency, this has to be a cooperative effort worldwide. And I see this lagging behind," he said, adding that more regulations and a level playing field for issuers could help stablecoins "flourish in a dramatic way." Several major jurisdictions have moved on stablecoin-specific rules, including the GENIUS Act, which created the first federal regulatory framework for payment stablecoins in the US when it was signed into law in July 2025 and requires 100% reserves.