Carstens Backs Stablecoin-Fiat Coexistence, Calls for Global Regulation
In brief
- Carstens reverses prior BIS-era skepticism, endorsing stablecoins for financial innovation and inclusion
- Global regulations and level-playing-field rules needed for stablecoins to flourish alongside fiat
- US GENIUS Act and EU MiCA framework now provide regulatory pathways for stablecoin issuers
- BIS under new leadership maintains concerns about current stablecoin designs and reserves
A Shift in Tone
Carstens said stablecoins can advance financial innovation and reduce transaction costs. The pivot is stark. In January 2022, he cautioned that stablecoins may lack the properties of sound money because issuers face incentives to invest reserves in risky assets. By June 2025, his final speech as BIS general manager, he warned stablecoins could become a source of liquidity risk.
Now, Carstens frames the challenge differently. He argues that proper regulatory guardrails and fair competitive conditions for issuers would let stablecoins flourish. The path forward, he suggests, requires global coordination on rulebooks—not bans.
Regulatory Frameworks Take Shape
Two major jurisdictions have moved to formalize stablecoin oversight. The GENIUS Act, signed into law in July 2025, created the first federal regulatory framework for payment stablecoins in the US. It mandates 100% reserves in high-quality liquid assets, including cash and short-term US Treasury securities.
The European Union took a parallel approach. Stablecoin issuers in the EU operate under MiCA, the Markets in Crypto-Assets Regulation. The framework requires authorization, an approved white paper, full reserve backing, and segregated reserve assets.
The BIS Remains Cautious
The institution Carstens once led hasn't fully embraced his optimism. Pablo Hernández de Cos, the current BIS general manager, noted in April that the stablecoin market remains small. The BIS itself has stated that current stablecoin designs fall short of key properties that underpin trust in money—a concern that persists even as regulatory scaffolding hardens.
Carstens' remarks suggest the debate is maturing past ideology toward pragmatism. Stablecoins aren't disappearing. The question, he implies, is whether they'll flourish under clear rules or languish in regulatory limbo. His answer: coexistence works if both sides—regulators and issuers—meet in the middle.
