Federal Reserve Governor Christopher J. Waller delivered opening remarks at the Fifth Conference on the International Roles of the Dollar on June 22, offering a rare and explicit endorsement of stablecoins and tokenized assets as forces that could reinforce dollar hegemony. He stated that distributed ledger technology and tokenized assets, including stablecoins, are building new intermediary channels for the dollar, running in parallel with – and increasingly intersecting – traditional banking and payment systems.
Private sector competition as a catalyst
Waller acknowledged that the dollar's central role rests on the U.S. economy's size and resilience, deep financial markets, and global trust in American institutions. But he stressed that the global financial landscape is changing rapidly. “The private sector is moving quickly to expand access to dollar-denominated assets globally, innovate financial services, and explore commercial opportunities that didn't make sense under legacy technology,” he said. He views such competition as healthy, arguing it often leads to better outcomes for consumers and society.
Symbiosis between stablecoins and Treasuries
The conference will feature deep dives into several crypto-related macro topics. Waller outlined research directions including how stablecoins and blockchain infrastructure could transform traditional payments and foreign exchange markets, particularly the rise of decentralized forex and alternative cross-border payment channels. More notably, the Fed is closely examining the symbiotic relationship between stablecoins and “U.S. safe assets.” Waller noted that fully dollar-backed stablecoins could create a direct pipeline funneling global liquidity demand into the U.S. Treasury market. The research will also explore spillover effects on exchange rates, dollar funding conditions, and cross-border capital flows.
Innovation meets risk: AI amplifies digital vulnerabilities
A key question remains: will stablecoins strengthen the dollar by broadening access to dollar instruments, or will they introduce new systemic strains by reshaping intermediation and capital flows? Separately, Fed Vice Chair Michelle Bowman recently warned that while the financial system is adapting to AI and other advances, the technology also amplifies digital vulnerabilities in critical infrastructure. The Fed thus keeps one eye on innovation and the other on emerging risks.