Bank of England policymaker Megan Greene and US Federal Reserve policymaker Christopher Waller publicly disagreed on Sunday in Dubrovnik, Croatia, over whether stablecoins have a future in digital payments. Greene predicted that tokenised deposits will replace stablecoins within five years, while Waller defended stablecoins as a harmless payment innovation that brings competition to the payments world. The debate exposed how far the leading central banks remain from agreement on the digital money behind tomorrow's payments—a divide reaching into bank funding, cross-border transfers and monetary policy, according to Reuters.
Stablecoins are cryptocurrencies designed to maintain a stable value by being pegged to assets such as fiat currencies, commodities, or other financial instruments.
Greene Predicts Tokenised Deposits Will Replace Stablecoins
Greene placed her bet on tokenised deposits, reasoning that banks will move once they grasp what inaction costs them. Banks have dragged their feet to protect fee income, she said, and that reluctance will not survive the threat to their deposit base.
"I think tokenised 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 said.
She questioned whether stablecoins hold their value as advertised, flagged unresolved regulatory questions, and pointed to their use in illicit activity. Stablecoins drain funding from commercial lenders, she added, which can blunt the tools central banks use to steer the economy.
Those concerns track the caution behind the Bank of England's own rulemaking. "I like to think of it as a massive race between the tortoise, the hare and the rhino," Greene said. "The tortoise is the central bank digital currency…the hare is stablecoins and the rhino is tokenised deposits. We'll probably end up with all three, but if I had to put money in one…it would be the rhino, tokenised deposits, which I think will probably take off."
Waller Defends Stablecoins as Payment Innovation
Waller took the opposite line from the same stage, framing stablecoins as a cost-cutting innovation that regulators should not strangle. "I've always just looked at stablecoins as a payment instrument; there's nothing evil about it, nothing dangerous about it," Waller said. "They are just bringing competition into the payments world."
To him, the lobbying against the tokens betrays how seriously incumbents rate the threat. "These things are used for cross-border payments, and they are scaring the banks…If you think banks don't think this is a threat, then why are they lobbying so hard to stop it?" Waller said.
UK Lawmakers Rebuke Bank of England Holding Caps
UK lawmakers rebuked the Bank of England's proposed holding caps of roughly £20,000 per person, warning that the limits risk leaving Britain an outlier in digital finance.
The split between Greene and Waller mirrors a wider standoff between their institutions over cross-border rules, a tension BoE Governor Andrew Bailey recently cast as a coming wrestle with the US administration, even as Deputy Governor Sarah Breeden presses for closer US–UK coordination.
FAQ
What did Megan Greene and Christopher Waller disagree about on Sunday?
Greene and Waller publicly disagreed on Sunday in Dubrovnik, Croatia, over whether stablecoins have a future in digital payments. Greene predicted that tokenised deposits will replace stablecoins within five years, while Waller defended stablecoins as a harmless payment innovation.
Why does Megan Greene believe tokenised deposits will replace stablecoins?
Greene reasoned that banks will digitise deposits once they grasp what inaction costs them. She said banks have dragged their feet to protect fee income, but that reluctance will not survive the threat to their deposit base. She also questioned whether stablecoins hold their value as advertised and pointed to unresolved regulatory questions and their use in illicit activity.
What did UK lawmakers say about the Bank of England's stablecoin rules?
UK lawmakers rebuked the Bank of England's proposed holding caps of roughly £20,000 per person, warning that the limits risk leaving Britain an outlier in digital finance.
