Federal Reserve Governor Chris Waller made a robust case for stablecoins as a competitive force in payments during a panel in Croatia this weekend, putting him at odds with most of his fellow panelists who favored tokenized deposits. The wide-ranging session also produced a lively exchange on what happens to stablecoins if interest rates turn negative.
Waller was the last of five panelists to speak, and by then two had already declared their preference for tokenized deposits. Bank of England external MPC member Megan Greene framed the landscape as a race between a tortoise (CBDCs), a hare (stablecoins) and a rhino (tokenized deposits), and said she’d put her money on the rhino. Chris Kopf from Union Investment went further, calling stablecoins “snake oil” and describing them as money market shares that pay no interest.
Waller was unconvinced. His argument centered on competition rather than the instrument itself. “There is now a new set of rails that you can bypass these monopoly-type networks to make payments. So for me, really it’s bringing competition to the payments world,” he said. He acknowledged stablecoins may never gain a large retail footprint, but argued the competitive pressure alone matters. “All you need is competition on the fringe to drive pricing.”
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