Editorial | Dear BIS: An Anchor Is Not a Destination

This piece was translated from Korean. Read the original here.

The Bank for International Settlements has published another report. This time, it claims to have proven mathematically that blockchain is structurally flawed. The author is Hyun Song Shin, the BIS's chief economist and a Princeton-trained scholar of considerable distinction. The report is meticulous and rigorous. There are passages that make the reader nod along.

Then one reaches the final page.

"Central banks must provide the trust anchor."

Whenever Mr Shin publishes on blockchain and money, readers encounter a familiar experience. His 2020 paper examined the Bank of Amsterdam as an early stablecoin, concluding that private money requires central bank oversight. His 2021 paper modelled distributed ledgers and concluded that centralised designs are generally optimal. His 2023 bulletin argued that stablecoins violate the singleness of money, favouring tokenised deposits settled in central bank money. The 2025 BIS Annual Report presented a detailed blueprint for a unified ledger. And now this. Five years. Different mathematics. The coordinates of the conclusion have not moved. The question must be asked: is this analysis, or is it a voyage with the destination plotted before the ship left port?

The report's central argument runs as follows. Validators on decentralised blockchains must be rewarded to maintain consensus. Those rewards come from user fees. The more decentralised the chain, the higher the rewards required, and therefore the higher the fees. Users priced out of expensive chains migrate to cheaper ones. Fragmentation is the inevitable result. Ethereum's congestion gave rise to Solana and Tron. The data, the report argues, prove it.

Here it is worth pausing. In his 2021 paper, Mr Shin reached a notably more cautious conclusion: that decentralised designs can be optimal in myopic markets. The case for decentralisation was held open, conditionally. That qualification has quietly disappeared from the 2026 report. As the body of work has grown, the conclusion has become simpler. That is an unusual direction of travel for serious scholarship.

The logic is not wrong. But while the report is exhaustive on blockchain's fragmentation, it is silent on the fragmentation of the incumbent system. Cross-border wire transfers still take two days through SWIFT and consume several percent of the principal. The BIS places great weight on the concept of the "singleness of money," yet the reality is less tidy than the theory. The dollar in a Federal Reserve account, the dollar in a PayPal wallet, and the dollar routed through correspondent banking are not frictionless equivalents. For the hundreds of millions holding Argentine pesos, Turkish lira, or Lebanese pounds, the trust anchor was never there to begin with.

The report compares the reality of blockchain against an idealised version of central banking. A fair comparison requires holding both sides to the same standard.

The report takes institutional trust in central banks as axiomatic. It should not.

Bitcoin was not born in a vacuum. When Satoshi Nakamoto mined the genesis block in January 2009, he embedded that day's Times of London headline: "Chancellor on Brink of Second Bailout for Banks." The technology was a direct response to the failure of the very institutions Mr Shin's report treats as the natural solution. What the BIS calls a trust anchor, much of the world has experienced as a control anchor. For Venezuelans watching hyperinflation destroy their savings, for Nigerians shut out of the dollar system, for Iranians cut off from global finance by sanctions, the central bank was not a safety net. It was the source of the problem. Not one line of the report addresses this.

Mr Shin's 2020 paper on the Bank of Amsterdam traced how that institution collapsed after flourishing for nearly two centuries as an early model of sound money. The lesson he drew was that private money is inherently fragile. But the paper left something out. The Bank of Amsterdam did not fall because of any inherent flaw in its monetary design. It fell because of political interference and the pressure to finance war. History offers uncomfortable testimony for central banks as well as for their critics.

Follow the report's proposed remedy to its logical conclusion. A unified ledger operated by central banks. Tokenised central bank money. All transactions on a single programmable platform. Monetary unity is achieved. Network effects are maximised. And every transaction is recorded in real time by a single authority.

China's digital yuan is already running this experiment. Money with expiry dates. Money restricted to certain regions. Money that cannot be spent on disfavoured goods. The programmability that makes a central bank digital currency convenient is precisely what makes it an instrument of control without historical precedent. The report discusses the technical elegance of a unified ledger at length. It does not discuss the political environment in which that ledger would operate. A system is only as trustworthy as the institution running it.

The BIS is, by design, the central bank of central banks. That it argues for the superiority of central bank infrastructure is, in one sense, entirely predictable. The concern is that such arguments, dressed in the language of peer-reviewed economics, flow directly into national policy deliberations.

South Korea is a case in point. The Bank of Korea is deepening its CBDC research. The financial authorities are moving toward a framework for stablecoin regulation. If policymakers reach for this report as the intellectual foundation for that framework, they should understand where the argument comes from and what it leaves out.

The analysis is not wrong. It is selective. And the selection — across five years and half a dozen papers — consistently points in one direction.

Blockchain is imperfect. So is central banking. The relevant question is not which system is perfect, but which system's failures are more tolerable — and who bears the cost when things go wrong.

The BIS does not answer that question.

The answer, it should be said, is not that blockchain should replace central banks. It is that a world in which the two systems compete and constrain each other is preferable to one in which either absorbs the other. Just as the collapse of the gold standard eventually produced a more flexible monetary order, today's competition between decentralised and centralised systems may itself be part of the voyage toward something better. What the BIS should fear is not blockchain fragmentation. It is the complacency that a monopoly on monetary infrastructure would inevitably produce.

A ship's purpose is to sail. An anchor is a tool — useful in a storm, necessary in port, but never the destination. A ship that drops anchor and never raises it again has not found safety. It has simply stopped.

Whatever form the monetary system of the future takes, one question must not be dropped. Is it designed for the voyage, or for permanent anchorage?

The BIS, for all its intellectual firepower, has not yet answered that.