Stablecoins vs. Banks: A Debate on the Future of Money

The Bank for International Settlements (BIS) recently questioned the viability of stablecoins, arguing they fail to meet three key criteria for sound money: singleness, elasticity, and integrity. Yet, this critique overlooks the practical realities of how stablecoins operate in the wild.

Unlike bank deposits, which can fracture during crises (as seen with SVB), stablecoins like USDC and USDT maintain their peg even when traditional banking systems falter. Their instant settlement mechanisms—enabled by blockchain—offer a different kind of elasticity, one that doesn’t rely on the delays inherent in legacy systems. Flash loans, for instance, demonstrate how programmable liquidity can replace bureaucratic friction.

On integrity, the transparency of blockchain networks allows for superior tracking of illicit flows compared to traditional banks, which intercept less than 1% of fraudulent activity. The narrative that stablecoins are inherently flawed ignores their evolving role as a complement—not a clone—of banking infrastructure.