A Bank of England The popularity of stablecoins may soon wane, replaced by token deposits, an economist says.
“I think token deposits will probably replace stablecoins, and five years from now, I think we might wonder why we were talking about stablecoins,” he said. Megan Greenwhose comments were made on Sunday (May 31) at a banking conference in Dubrovnik, Croatia I mentioned By Reuters.
Green emphasized that there is a market for Central bank digital currencies (CBDCs), stablecoins and digital deposits, adding that the latter product may emerge victorious after commercial banks see that they will lose traditional bank deposits.
Her views contradict those of her colleague, the Governor of the US Federal Reserve Christopher Wallerwho argued in favor of stablecoins as payment method.
“There’s nothing sinister about it, nothing dangerous about it,” he said. “They only bring competition to the payments world.”
Green said digital deposits “didn’t take off because commercial banks don’t want to lose fees…. But they will lose them anyway, and when they realize that, they will put more (effort) into developing them.”
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She said that stablecoins are not stable, noting that there are questions about their regulation and that they have been used for… Illegal purposes. Green emphasized that such restrictions mean that the future could work against stablecoins.
“I like to think of it as a giant race between the tortoise, the hare and the unicorn,” she said.
“The tortoise is the central bank digital currency…the hare is stablecoins and the unicorn Token deposits. We’ll probably end up with all three, but if I had to put money into one…it would be the unicorn token deposit, which I think would probably work.
While writing about the adoption of stablecoins last week, PYMNTS argued that the ecosystem around these tokens appears to be… High-speed highway system Feeding underdeveloped local roads.
“Cross-chain transfers may be settled instantly, but businesses and consumers still operate within local banking systems, regulatory frameworks, tax systems, treasury operations, and compliance structures that were not designed for tokenized money,” the report added.
The result, PYMNTS said, is that the “last mile” of stablecoin adoption often comes with many of the same frictions that blockchain was designed to eliminate.
The report also cited PYMNTS Intelligence research conducted in March that showed that while 42% of mid-market companies at least discussed stablecoins, only 13% reported doing so. Actually using these digital assets.
