Tether CEO backs stablecoins over tokenized deposits as BIS raises risks

Tether CEO Paolo Ardoino has challenged the Bank for International Settlements’ preference for tokenized bank deposits, arguing that fully reserved stablecoins give users a stronger alternative to money held under fractional reserve banking. Summary Tether CEO Paolo Ardoino challenged the BIS preference for tokenized bank deposits, arguing that fully reserved stablecoins offer users a safer alternative. BIS chief Pablo Hernández de Cos said stablecoins face problems with redeemability, interoperability, financial integrity and monetary sovereignty. Ardoino questioned why savers would keep money in fractional reserve products when stablecoins can hold reserves in liquid assets such as U.S. Treasuries. The debate has reached U.S. lawmakers as banking groups warn that stablecoin rewards could pull deposits from banks and reduce funds available for lending. The Bank for International Settlements laid out the case for tokenized deposits on Aug. 28, when General Manager Pablo Hernández de Cos told the Jackson Hole Economic Symposium that stablecoins still fall short of several properties needed to function as money at scale. Ardoino responded by questioning why savers would choose bank d...