Bank for International Settlements paper defines money as an architecture of trust and assesses stablecoins

The Bank for International Settlements published a paper by Iñaki Aldasoro that presents money as a system of interlocking promises sustained by institutional trust, rather than primarily as a commodity, technology or medium of exchange. Starting from payment and settlement, the paper argues that monetary systems depend on a hierarchy anchored by central bank money, conversion of private money at par, elastic credit constrained by funding and public backstops that prevent liquidity stress from disrupting the wider payment system. The framework highlights recurring tensions between money and credit, elasticity and discipline, and private money creation and public validation. Banks create purchasing power through lending, but funding costs, capital and liquidity requirements, and supervisory judgment constrain expansion. During stress, central bank liquidity, deposit insurance and resolution arrangements defend par and contain cascading defaults. At the international level, this architecture is weaker and more asymmetric: about USD 14.7 trillion of dollar denominated liabilities were booked outside the United States at the end of 2025, while access to Federal Reserve swap lines and other dollar backstops varies across jurisdictions. Applying the framework to new forms of money, the paper characterizes gold and bitcoin as attempts to escape the social compact underlying money, without the elasticity and backstops required for settlement at scale. Stablecoins instead seek entry into the existing hierarchy but currently lack direct central bank access, lender of last resort support and the capacity to create credit elastically. Their wider integration would therefore require credible par convertibility and regulatory conditions such as supervision, capital requirements, reporting obligations and access to backstops, with validation tied to social usefulness.