Central bank officials from the United Kingdom and the United States clashed head-on over the future of money. Megan Greene, a monetary policy committee member at the Bank of England (BOE), predicted that "tokenized deposits" issued by commercial banks — backed by stability and trust — will become mainstream, while Christopher Waller, a governor of the U.S. Federal Reserve, defended stablecoins as a key driver of payment innovation.
According to Reuters on Friday, Greene said at a "Stablecoins and Monetary Policy" panel discussion at an economic conference in Dubrovnik, Croatia, that "the popularity of stablecoins will fade before long, and tokenized deposits, the digital version of traditional bank deposits, will replace them." She added, "In about five years, we may wonder why we had so much discussion about stablecoins."
Central bank digital currencies (CBDCs), stablecoins, and tokenized deposits are currently competing for leadership in next-generation digital money. Stablecoins are virtual assets that minimize price volatility by pegging their value to fiat currencies such as the U.S. dollar. Tokenized deposits are commercial bank deposits issued in the form of blockchain-based digital tokens, combining the credibility of the existing banking system with the transactional efficiency of digital assets. Although the move toward institutional integration is accelerating — with the U.S. Congress recently passing the GENIUS Act, which establishes a regulatory framework for stablecoins — Greene projected that tokenized deposits will be more competitive over the long term.
Greene cited banks' current interests as the reason tokenized deposits have not yet spread in the market. "Commercial banks don't want their existing fee revenue structure to be disrupted," she said. "But once banks realize that this change is inevitable, they will become more active in developing the related technology."
Greene also pointed out the structural limitations of stablecoins. "Despite their name, stablecoins are not always stable," she said. "Some may be used for illegal transactions or money laundering." She also raised concerns that if stablecoins absorb funds from commercial banks and weaken the deposit base, they could diminish the effectiveness of central bank monetary policy. "The turtle is the CBDC, the rabbit is the stablecoin, and the rhinoceros is the tokenized deposit," she said. "All three may eventually coexist, but if I had to invest in one, I would put my money on tokenized deposits."
Waller, who attended the same panel, took the opposite view, emphasizing the positive functions of stablecoins. "There is nothing evil or dangerous about stablecoins themselves," he said. "They are a financial innovation that introduces new competition into the payments market." His argument is that excessive regulation should not impede financial innovation.
Waller also stressed that stablecoins could expand the international influence of the U.S. dollar. "Countries that adopt stablecoins are effectively placed in a position similar to fixed exchange rate countries," he explained. "They end up importing the impact of U.S. monetary policy, which ultimately extends the influence of U.S. monetary policy to more countries." Because stablecoin issuers must hold U.S. dollars and U.S. Treasury bonds as reserve assets corresponding to their issuance volume, expanded use of stablecoins could increase demand for the dollar and Treasuries, further solidifying the dollar's status as the global reserve currency.
However, Waller was skeptical about CBDCs. "Major central banks have effectively halted their CBDC initiatives," he said. "Central banks have not been able to find a reason why they should introduce CBDCs."
