Bank of England and Fed Governors Clash on Stablecoins

Senior central bank officials have offered sharply contrasting visions for the future of digital money, with one predicting the decline of popular stablecoins and another defending them as a force for healthy competition. The debate unfolded during a panel discussion at the 32nd Dubrovnik Economics Conference in Croatia.

Bank of England policymaker Megan Greene forecast that tokenized deposits, which are digital versions of traditional bank deposits, will likely overtake stablecoins within five years. She argued that while there is a market for central bank digital currencies, stablecoins, and digital deposits, tokenized deposits may emerge as the ultimate winner. Greene suggested commercial banks will invest more heavily in this technology once they recognize the threat of losing their traditional deposit bases and associated fee income.

In contrast, U.S. Federal Reserve Governor Christopher Waller defended stablecoins, framing them primarily as a payment instrument. He stated that stablecoins bring more competition into the payments system, which can lower costs, and argued they should not be seen as inherently problematic. Waller also noted that the growing use of...