Fed and BoE clash on stablecoin future at Dubrovnik conference
In brief
- Federal Reserve's Waller argues dollar-backed stablecoins strengthen US monetary influence globally
- Bank of England's Greene predicts stablecoins will fade, replaced by tokenized bank deposits
- Policymakers debated stablecoin regulation at the 32nd Dubrovnik Economics Conference panel
- US Senate passed CLARITY Act to establish digital asset regulatory framework
Waller's case for stablecoins
Christopher Waller said that the growing use of dollar-backed stablecoins could bolster the global influence of US monetary policy. Speaking at the Croatian National Bank event, he noted that countries increasingly relying on dollar-backed stablecoins may effectively import US monetary conditions.
Waller framed stablecoins as a straightforward payment innovation. "I've always just looked at stablecoins as a payment instrument; there's nothing evil about it, nothing dangerous about it. They are just bringing competition into the payments world," he said. The Fed governor also weighed in on central bank digital currencies, a topic he's long questioned. Waller, a long-time skeptic of central bank digital currencies, said that enthusiasm for CBDCs has faded among many central banks.
Greene's competing vision
Greene took a different tack. She said stablecoins could fade from view in a matter of a few years, predicting instead that tokenized bank deposits—what she calls "the rhino"—would dominate. Greene compared the competition between payment technologies using a metaphor of a tortoise, hare, and rhino, predicting tokenized deposits would likely take off.
The divergence reflects real-world regulatory friction. Debate over US policy on stablecoin yield has stymied progress on the US Digital Asset Market Clarity Act under consideration in the US Senate. That gridlock finally broke in May. The CLARITY Act passed out of the Senate Banking Committee on May 15 after months of debate between banks and the crypto industry over stablecoin yield provisions.
The stakes for US leadership
Wyoming Senator Cynthia Lummis warned that the US will lose its leadership position in crypto to other countries, including China, if lawmakers fail to pass stablecoin legislation. The underlying tension is clear: central bankers and lawmakers disagree on whether stablecoins are a fixture or a fad. Waller's optimism about their reach sits uneasily with Greene's skepticism about their longevity. What both acknowledged, though, is that payment innovation on the blockchain won't wait for consensus.
Frequently asked questions
Why do central bankers disagree on stablecoins?
Waller sees stablecoins as benign payment tools that strengthen US monetary influence globally. Greene expects them to be displaced by tokenized bank deposits within years. Their disagreement reflects uncertainty about whether stablecoins are a durable technology or a transitional trend.
What is the CLARITY Act and why does it matter?
The CLARITY Act is US legislation that establishes a federal regulatory framework for digital assets. It passed the Senate Banking Committee in May after months of debate over stablecoin yield policies. Lawmakers say it's critical to prevent the US from losing crypto leadership to countries like China.
