Bank of England policymaker Megan Greene and Federal Reserve policymaker Christopher Waller publicly disagreed in Dubrovnik, Croatia, over the future of stablecoins. Greene said tokenized deposits could displace stablecoins, adding that five years from now people may wonder why stablecoins were such a major topic. Waller took the opposite view, describing stablecoins as a payment innovation rather than a threat.
Greene says banks have reason to digitize existing deposits
Greene argued that banks are likely to move toward tokenized deposits once they fully recognize the cost of staying on the sidelines. In her view, lenders have been slow partly because they wanted to protect fee income, but that hesitation may not last if their deposit base comes under pressure.
She also questioned stablecoins on several fronts. Greene pointed to doubts over whether they can reliably hold value, said regulatory issues remain unresolved, and cited their use in illicit activity. She added that stablecoins can pull funding away from commercial banks, which may weaken some of the channels central banks use to influence the economy.
Using a race analogy, Greene described central bank digital currency as the “tortoise,” stablecoins as the “hare,” and tokenized deposits as the “rhino.” She said all three may end up coexisting, but if she had to back one, it would be the rhino: tokenized deposits.
UK rule debates already extend to holding caps
Those concerns line up with the Bank of England’s cautious approach to stablecoin rulemaking. The report noted criticism from UK lawmakers, who warned that proposed holding limits of around £20,000 per person could leave Britain looking too restrictive in digital finance. The debate reaches beyond retail payments and into bank funding, cross-border transfers, and monetary policy transmission.
Waller frames stablecoins as harmless payment competition
Waller defended stablecoins from the same stage, saying he has always viewed them as a payment instrument. He said there is “nothing evil” and “nothing dangerous” about them, and argued that they simply introduce competition into the payments sector.
He also suggested that lobbying against stablecoins shows how seriously incumbent players view the competitive threat.
Broader US-UK policy gap remains unresolved
The exchange reflects a wider divide between the Bank of England and the Federal Reserve over digital money rules, especially in cross-border settings. According to the report, BOE Governor Andrew Bailey recently described the issue as an upcoming struggle involving the US administration, while Deputy Governor Sarah Breeden has been pushing for closer coordination between the UK and the US.
The panel made one point clear: no single model has won the argument. Stablecoins, central bank digital currencies, and tokenized deposits are still competing for a place in future payment systems.