Waller, Greene Clash Over Future of Stablecoins

Federal Reserve Governor Christopher Waller and Bank of England policymaker Megan Greene debated stablecoins on a panel titled “Stablecoins and monetary policy” at the 32nd Dubrovnik Economics Conference in Dubrovnik.

Waller described stablecoins as a payments instrument that increases competition in the payments system and said he saw nothing inherently dangerous about them. He warned that jurisdictions relying heavily on dollar-backed stablecoins could import U.S. interest-rate and liquidity conditions. Waller reiterated that many central banks have cooled their enthusiasm for central bank digital currencies.

Greene predicted tokenized deposits — bank liabilities represented as digital tokens — are likely to supplant privately issued stablecoins within a few years. She commented, “I think tokenized deposits are probably going to take over from stablecoins and five years from now, I suspect we might wonder why we were talking about stablecoins.” Greene used a metaphor to contrast payment technologies, calling a CBDC the tortoise, stablecoins the hare and tokenized deposits the rhino.

The remarks came as U.S. lawmakers and regulators continue to debate how to classify and regulate stablecoins. The Digital Asset Market Clarity Act, often called the CLARITY Act, passed the Senate Banking Committee on May 15 and remains pending before both chambers of Congress. Lawmakers have disputed whether stablecoins should be allowed to pay yield and what role banks should play in issuing or backing them.

Sen. Cynthia Lummis of Wyoming warned failure to pass federal legislation could cede leadership in digital asset markets to other countries, including China.

Regulatory uncertainty centers on whether stablecoins should be treated under bank or securities rules and whether interest on stablecoin holdings should be permitted. Proponents of tokenized deposits say those instruments would pair bank-deposit protections with the efficiency of tokens. Supporters of privately issued stablecoins emphasize their role as a low-friction payment instrument that can increase competition in payments.

Panelists agreed the payments landscape is shifting but differed on which digital-money architecture will scale and how quickly any change will occur.