Bank of England's Greene Predicts Decline in Stablecoin Popularity

DUBROVNIK, Croatia, May 31 (Reuters) - Megan Greene, a Bank of England policymaker, suggested on Sunday that the demand for stablecoins may diminish in favor of tokenized deposits, which represent digital versions of conventional bank deposits. Despite a surge in popularity over recent years, Greene's remarks indicated that the trend towards stablecoins could reverse as tokenized deposits gain traction. 'I believe tokenized deposits will likely surpass stablecoins, and in five years, we may question why we even discussed stablecoins,' she stated at a conference. Greene emphasized the potential market for central bank digital currencies, stablecoins, and digital deposits, predicting that the latter could emerge as the dominant option once banks realize the risk of losing traditional deposits. Meanwhile, U.S. Federal Reserve policymaker Christopher Waller defended stablecoins, advocating for their role as a financial innovation that could lower costs and enhance competition. Greene raised concerns about the stability of stablecoins, potential illicit use, and their impact on monetary policy effectiveness. Waller reiterated the banks’ fear of stablecoins impacting their operations, noting their strong lobbying against such developments. Greene likened the situation to a competition among three contenders in the financial ecosystem – central bank digital currencies as the tortoise, stablecoins as the hare, and tokenized deposits as the rhino, with a prediction favoring the rise of tokenized deposits.