The General Manager of the Bank for International Settlements (BIS) has once again urged international cooperation regarding the use of stablecoins, stating it is critical to prevent severe market fragmentation. The BIS has long expressed concerns about stablecoins, a type of cryptocurrency typically pegged 1:1 to the US dollar. BIS General Manager Pablo Hernandez de Cos, speaking in Japan, stated that stablecoins have the potential to undermine monetary and fiscal policy, create stress in financial markets, and hinder the fight against illicit financing, making global coordination "essential." De Cos warned that without such a mechanism, "different regulatory frameworks for stablecoins across jurisdictions could lead to significant market fragmentation or foster harmful regulatory arbitrage," referring to companies seeking out the most lenient rules. These comments come as the United States and other major economies race to establish regulatory frameworks for stablecoins, attempting to catch up with jurisdictions like Abu Dhabi and Singapore, which already have frameworks in place. The Governor of the Bank of England and Chairman of the Financial Stability Board, Andrew Bailey, also warned last week that progress on developing international standards for stablecoins has slowed over the past year. De Cos reiterated that a "run" on stablecoins could trigger market stress, but this risk could be "significantly reduced" if stablecoin issuers have access to arrangements like deposit insurance or central bank lending facilities. Tether and Circle Internet Corp., the issuers of the world's two largest stablecoins, account for approximately 85% of the global circulating total of $315 billion. He noted that these stablecoins also exhibit characteristics that make them "more like securities than money," particularly by creating "redemption frictions" that often cause them to deviate from their face value. He added, "From this perspective, they currently operate more like exchange-traded funds than money." He also commented on the current key debate about whether stablecoins should pay interest like traditional bank accounts. De Cos stated, "If there is no yield from holding stablecoins and the opportunity cost of holding them is high, for instance during periods of high interest rates, the shift from bank deposits to stablecoins might be less pronounced. This would be the case if a prohibition on paying interest on stablecoins could be enforced."