analysis

BIS vs Tether: Do Stablecoins Fail as Money?

Editorial · Aug 30, 2026 · 8 min read

At Jackson Hole, BIS General Manager Agustín Carstens presented a three-test framework for what makes money sound — and concluded that stablecoins fail all three. Within days, Tether CEO Paolo Ardoino responded, and his answer was more interesting than a rebuttal: he agreed the BIS is worried, and argued the worry is justified — about fractional-reserve banking, not stablecoins. The exchange is the clearest statement yet of the fault line running through stablecoin policy.

Carstens’ Three Tests

The BIS framework evaluates money on three properties: safety of value, elasticity of supply, and integrity of execution. Stablecoins, Carstens argued, fail each one. Value safety is contingent on issuer reserves that sit outside the central bank’s balance sheet and, in many jurisdictions, outside a deposit-insurance regime. Supply elasticity is absent because private issuers cannot expand issuance in a crisis the way a central bank can — they mint against inflows, not against macroeconomic need. Execution integrity depends on blockchain infrastructure that the BIS has consistently characterized as unable to guarantee finality at settlement. The framework is not new; the BIS has made versions of this argument since 2023. What is new is the venue and the timing — delivered to central bankers at Jackson Hole while banks themselves race to issue coins.

Ardoino’s Counter: Follow the Reserves

Ardoino’s response did not dispute the framework so much as invert it. He argued the BIS is ‘rightfully worried’ because fully-reserved stablecoins expose a structural feature of commercial banking that has operated quietly for decades: fractional reserves. If a depositor can hold a token that is one-to-one backed by Treasuries and cash equivalents, the question becomes why they would keep funds in an account that is fractionally reserved and, in most cases, uninsured above a threshold. Ardoino warned of repercussions if depositors moved at scale. This is the bank-run argument — not that stablecoins are unsafe, but that they make the alternative’s weakness visible. It is a political framing dressed as a technical one, and it lands because the reserve question is genuinely unanswered.

Banks Are Building Them Anyway

The most telling fact in the Forkast reporting is not Carstens’ argument but the backdrop: banks are building stablecoins regardless. Deposit-token projects and consortium coins continue at major institutions even as the BIS, their nominal apex coordinator, describes the product as failing every test of money. The likely read is that banks do not accept the tests. A bank-issued stablecoin settles on bank rails, is redeemable through bank channels, and can be elastic in the ways Carstens demands — because the issuer is a regulated bank with access to central-bank liquidity. In other words, the BIS critique may be aimed at the Tethers of the world while clearing a path for the incumbents. That division — offshore fully-reserved issuers versus bank deposit tokens — is where the actual policy fight sits.

What to Watch

Two things matter from here. First, whether any jurisdiction writes Carstens’ elasticity test into binding rules, which would functionally exclude non-bank issuers from systemic scale. Second, whether Ardoino’s bank-run framing proves self-fulfilling: if stablecoin supply keeps growing at the expense of bank deposits, regulators will be forced to pick a side, and the BIS has signaled which side it is on. The stablecoin market has grown on the assumption that it can coexist with banking. This exchange is evidence that the coexistence thesis is what both men actually dispute.

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