Bank of England Monetary Policy Committee member Megan Greene said the current wave of stablecoin adoption may prove temporary, arguing that within five years tokenized deposits could take their place. Speaking at a conference in Dubrovnik, Croatia, Greene said banks may eventually realize that failing to act could cost them traditional deposits, making tokenized deposits the more durable model.
Greene argues tokenized deposits remove an extra layer
Greene described central bank digital currencies, stablecoins, and digital deposits as products with different use cases, but made clear she sees stronger long-term potential in a bank-led structure. In her view, stablecoins are private-sector liabilities that usually still depend on commercial bank deposits as backing, which leaves them built on top of the banking system rather than embedded inside it. Tokenized deposits, by contrast, place bank deposits directly on blockchain rails and cut out an intermediate layer.
She did not dismiss the short-term use of stablecoins. Greene said they are helping drive competition in payments and are contributing to financial innovation, but she argued that this advantage could erode once banks begin adopting tokenized deposits at scale.
Waller says stablecoins should not be squeezed by regulation
Fed Governor Christopher Waller took the opposite side at the same event. He said he has long viewed stablecoins as a payment instrument and argued they are neither inherently harmful nor dangerous. His position was simple: stablecoins add competition to payments.
Waller said their value is most visible in areas such as cross-border transfers and small-value payments, where they can deliver similar liquidity at lower cost. He also warned that overly tight rules, including requirements for 100% cash backing or limits on issuance size, could weaken the sector’s capacity to innovate.
Different policy instincts in the UK and US
The contrast between Greene and Waller points to a broader split between UK and US regulatory thinking. Greene’s view aligns with folding digital money innovation into the existing banking framework through tokenized deposits. Waller’s stance gives more room to market-led development, with stablecoins treated as payment competitors rather than something to be replaced quickly.
That divide could shape future rulemaking. The report noted that if the UK leans toward Greene’s position, sterling stablecoin legislation may move closer to a bank-dominated tokenized deposit model. If the US follows Waller’s approach, the regulatory environment for stablecoins may remain more permissive. Either way, stablecoins are now firmly part of the policy debate for central banks, lawmakers, and commercial banks.