BoE’s Greene predicts tokenised deposits will eclipse stablecoins within five years
While U.S. Federal Reserve’s Waller defends stablecoins as a competitive payment innovation, Greene cites regulatory risks and monetary policy concerns as headwinds for crypto-backed assets.
Bank of England policymaker Megan Greene has forecast that the dominance of stablecoins is likely to wane, predicting they will be superseded by tokenised deposits within the next five years. Speaking at a conference in Dubrovnik, Croatia, on Sunday, May 31, Greene argued that commercial banks will eventually be compelled to develop digital deposit products to prevent the loss of traditional customer funds.
Greene, who addressed the event alongside U.S. Federal Reserve policymaker Christopher Waller, utilised a racing analogy to illustrate the future landscape of digital finance. She described central bank digital currencies as a tortoise, stablecoins as a hare, and tokenised deposits as a rhino. While acknowledging that all three may coexist, she indicated that the rhino—the tokenised deposit—is the most robust contender for long-term success.
The Bank of England official highlighted several structural vulnerabilities facing stablecoins, including concerns over their actual stability, regulatory uncertainty, and potential use in illicit activities. Greene further argued that the migration of deposits into stablecoin ecosystems could undermine the effectiveness of monetary policy by draining liquidity from the traditional banking sector.
Conversely, Waller defended stablecoins as a benign financial innovation that introduces necessary competition into the payments industry. He characterised stablecoins merely as a payment instrument, stating there was nothing dangerous about them. Waller noted that commercial banks are actively lobbying to restrict stablecoin growth because they perceive the assets as a significant threat to their cross-border payment businesses.
Greene suggested that the delay in the adoption of tokenised deposits stems from commercial banks’ reluctance to sacrifice existing fee income. However, she maintained that banks would eventually prioritise the development of these digital products to avoid losing their deposit base entirely. While stablecoin issuance has levelled off in recent months, some market participants still anticipate further growth in usage, despite Greene’s prediction that the industry may soon question why stablecoins were ever a major topic of discussion.
