Federal Reserve Governor Christopher Waller signaled that the rising use of dollar-backed stablecoins could extend the United States’ monetary influence, potentially importing US monetary conditions into other economies as these tokens gain traction globally. Speaking at the 32nd Dubrovnik Economics Conference, Waller framed stablecoins as a payment instrument rather than a threat, suggesting they intensify competition in the payments space rather than undermine it.
In the same Dubrovnik event, Megan Greene, a Bank of England policymaker and fellow panelist on “Stablecoins and monetary policy,” offered a more apprehensive take. Greene argued that stablecoins could fade from view within a few years, while she predicted tokenized deposits might become the dominant pillar of the digital monetary landscape. Their exchange highlighted a broader debate about how different digital money formats could coexist or supplant one another in the coming years.
Key takeaways
- Dollar-backed stablecoins could extend US monetary conditions internationally, according to a senior Federal Reserve official.
- Stablecoins are viewed by some as ongoing payment competition, not inherently dangerous, and they may bring competitive dynamics to global payments.
- There is a contrasting, evolving view on CBDCs and tokenized deposits, with some policymakers expecting tokenized deposits to become more prominent than stablecoins.
- US policy on stablecoins and yield remains a hurdle for broader crypto legislation, even as a framework moves through Congress.
Dollar-stablecoins and the reach of US monetary policy
During the Dubrovnik discussion, Waller emphasized that stablecoins—when backed by the dollar—need not be painted as inherently problematic. He described stablecoins as “a payment instrument” and asserted that they introduce competition into the payments ecosystem. His remarks align with a broader view among some policymakers that dollar-denominated stablecoins can serve as a bridge for cross-border payments, potentially reflecting US monetary policy conditions in other economies that adopt these tokens.
Bloomberg News relayed Waller’s remarks, noting that countries leaning more on US-dollar stability through stablecoins could import US monetary conditions. While Waller stopped short of embracing stablecoins as a policy fix or a substitute for traditional central banking tools, his stance underscores a realization among policymakers that digital money forms are altering the cadence of monetary transmission, even if the governance and risk frameworks remain unsettled.
Greene’s counterpoint at the same stage highlighted a more dynamic, if uncertain, trajectory for digital money. She argued that tokenized deposits—essentially bank deposits expressed in a tokenized format—could become a dominant force in relatively short order, possibly outpacing stablecoins in scale and speed of adoption. Reuters captured her metaphorical framing of the evolving ecosystem: “a massive race between the tortoise, the hare and the rhino,” with the tortoise representing central bank digital currencies (CBDCs), the hare symbolizing stablecoins, and the rhino standing for tokenized deposits. Greene suggested the rhino might ultimately surge ahead, taking off in the near future.
The divergent viewpoints reflect a long-standing debate about the future of state-backed digital money versus privately issued digital currencies. Waller expressed a degree of skepticism about CBDCs, while Greene suggested that the market could settle into a triad of technologies—CBDCs, stablecoins, and tokenized deposits—each serving different use cases and regulatory footprints. Their exchange occurred within the context of a broader policy dialogue about how to balance innovation with financial stability and consumer protection.
It’s worth noting that the Dubrovnik discussion occurred amid a broader regulatory environment in which central banks have grown cautious about the speed and design of digital money initiatives. The Bank of England’s stance, as echoed in Greene’s remarks, contrasts with Waller’s caution, indicating a spectrum of priorities among major economies when contemplating CBDCs, stablecoins, and the possibility of programmable money via tokenized deposits.
US policy hurdles and the path to clarity
The Dubrovnik panel’s informal atmosphere did little to obscure a central tension in US policy: progress on crypto regulation has been slowed by debates over stablecoin yields and the regulatory framework for digital assets. The Digital Asset Market Clarity Act, a key component of the broader regulatory push, has advanced within Congress but faces an uncertain path to enactment.
The legislation, often described as one of the most significant crypto regulatory efforts in the United States, has cleared hurdles in the Senate Banking Committee but has not yet secured passage in both chambers. The bill’s fate is intertwined with the broader political calendar, including midterm elections and the banking lobby’s influence, which has at times opposed certain stablecoin provisions and yield strategies. As of the latest reporting, it remained uncertain whether the CLARITY Act would be signed into law in 2026, despite its passage through committee.
In parallel, Senator Cynthia Lummis has warned that failure to pass the framework could cost the US its leadership role in crypto. In a recent X post, she argued that America’s dollar-dominated financial system has anchored global stability for a century and that the CLARITY Act would help the US build the next iteration of that system—“before Beijing decides it will.” Lummis’ message underscores a strategic imperative within the US policy arena: moving from debate to enactment to preserve influence in a rapidly digitizing financial world.
The broader implication for market participants is nuanced. While a clear regulatory regime could unlock investment and innovation, the transition period remains fraught with risk as different agencies and lawmakers weigh issues such as stablecoin yield, consumer protection, and the prudential requirements for tokenized deposits. The sense of urgency expressed by lawmakers like Lummis reflects a concern that lagging policy could invite competitive pressure from other jurisdictions that move more decisively on digital asset frameworks.
Context surrounding the EU and other jurisdictions also colors the policy backdrop. For instance, reporting around European discussions on euro stablecoins has underscored regulators’ emphasis on financial stability risks and the need for robust safeguards. While not the focus of the Dubrovnik discussion, these regional developments contribute to a global pattern: policymakers are balancing innovation with systemic risk as digital money becomes more embedded in everyday commerce.
As the policy dialogue evolves, investors, traders, and builders are watching not just the letter of the law but how its interpretation and enforcement will shape product design, custody solutions, and the monetization pathways for digital assets. The CLARITY Act’s progress will continue to be a bellwether for the pace at which the United States integrates digital money into its financial framework—and, by extension, how it competes on the world stage with other digital finance ecosystems.
In sum, the Dubrovnik debate highlighted a tension baked into the future of digital money: a landscape where CBDCs, stablecoins, and tokenized deposits each have roles to play, but where policy clarity and timely enactment will determine which path gains traction first. Market participants should monitor developments in the US legislative process, watching for signs that a comprehensive regulatory framework for digital assets is near, and for indicators about how rapidly tokenized deposits and stablecoins will scale in a shifting global payments regime.
Readers should stay tuned for updates on the CLARITY Act’s progress through Congress, any new central-bank stances on digital money, and how evolving regulatory expectations will influence the design and adoption of dollar-backed stablecoins and tokenized deposits in the coming months.
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