BIS Says Tokenised Deposits Should Carry Everyday Payments

The Bank for International Settlements has drawn a sharper line between two forms of programmable money. In a 28 August speech at the Jackson Hole Economic Symposium, General Manager Pablo Hernández de Cos argued that tokenised commercial-bank deposits should carry the bulk of day-to-day payments and wholesale settlement. Stablecoins, in his proposed division of labour, would remain available for narrower uses under rules strong enough to protect redemption and market integrity.

That is not an argument against tokenisation. Both stablecoins and tokenised deposits can move on programmable rails. The distinction lies in the claim behind the token and the mechanism that completes a payment. A stablecoin is normally issued against a pool of reserves and can circulate as a bearer-like asset across public networks. A tokenised deposit remains a liability of a commercial bank, with interbank settlement anchored in central bank money.

The BIS judges those properties through the idea of singleness: one unit of money should exchange at par with another unit of the same currency. A dollar bank deposit can move between banks because settlement balances ultimately adjust through central bank accounts. Two stablecoins referencing the same dollar may still trade at different secondary-market prices, live on different chains and require a market conversion or bridge before a recipient will accept them.

The speech identifies three questions that stablecoins must answer before serving as money at scale. The first combines par redemption with elasticity: can every holder receive full value during stress, and what liquidity or backstop prevents a run from forcing reserve sales? The second is finality and interoperability: can value cross multiple chains and platforms without fragile bridges or uncertain settlement? The third is accountability: can financial-crime controls and legal responsibility extend consistently beyond supervised issuers and exchanges into peer-to-peer transfers?

Tokenised deposits begin closer to the existing answer because they preserve the regulated account relationship and central-bank settlement layer. That advantage is institutional, not magical. If every bank builds a separate permissioned network, deposits become trapped in new walled gardens. Around-the-clock movement can also accelerate withdrawals during stress, while smart contracts create operational and legal questions that conventional payment procedures do not fully resolve.

The BIS therefore does not present a finished replacement. It explicitly says there is no multi-bank, cross-jurisdictional ecosystem issuing tokenised deposits through an interoperable framework today. Its preference is conditional on common standards, strong governance, legal finality, cyber resilience and a migration path that continues to work with existing banking systems.

Project Agorá is the strongest practical evidence behind the argument. In July, 28 participating institutions and central banks completed real-value transactions across six currencies. The controlled exercise covered 17 scenarios with approximately CHF 800,000 in total value. The BIS reports an average of about 80 seconds from payment initiation to settlement, with use cases including single-currency payments, payment-versus-payment and intragroup transfers.

The architecture combined tokenised commercial-bank deposits with tokenised central-bank reserves. Transactions could settle atomically across currencies, meaning the linked parts completed together or not at all. The test also used established ISO 20022 messages to interact with external systems, suggesting that tokenisation does not require every bank to discard its operational language on day one.

Those results deserve attention, but not a victory lap. The prototype was not integrated with live real-time gross settlement and core banking systems. Activity took place in defined windows under a detailed runbook, and the value was tiny beside global payment flows. The experiment demonstrates that the model can move real money under controlled conditions; it does not show that a production network can operate continuously, absorb failures or assign losses across jurisdictions.

Wyoming's Frontier Stable Token makes the comparison less abstract. The state's official material describes FRNT as a dollar-redeemable token deployed across seven public blockchains, backed by cash and short-term US government instruments. Its framework also requires reserves above the outstanding token value before excess earnings can be transferred to the state. That is a serious attempt to add public accountability to a stablecoin design, not the unbacked caricature often implied by the word crypto.

Yet FRNT and a tokenised deposit solve different access problems. A public-chain token can move between self-custodied wallets and applications that may never have a direct relationship with a bank. A deposit token brings an existing bank customer and regulated balance sheet onto programmable rails. The first maximises reach outside the banking perimeter; the second carries established settlement, supervision and liquidity arrangements into a new technical environment.

The plausible outcome is therefore coexistence rather than a universal winner. Stablecoins may retain public-chain, decentralised-finance and cross-border niches. Tokenised deposits may become the preferred instrument for regulated corporate payments and wholesale settlement. The real test is whether each product is described honestly: a token that promises money-like use should meet money-like standards, while a product without those protections should not borrow the language of guaranteed cash.