Bank of England Official Predicts Stablecoin Demand May Fade, Replaced by Tokenized Deposits

Bank of England policymaker Megan Greene predicted on May 31, 2026 that tokenized deposits will replace stablecoins within five years, arguing stablecoins are unstable and reduce monetary policy effectiveness. U.S. Federal Reserve policymaker Christopher Waller countered on the same panel in Dubrovnik, Croatia, defending stablecoins as payment innovation that brings competition and scares banks through cross-border capabilities.

Tokenized deposits versus stablecoins

• ▪Megan Greene stated on May 31, 2026 that there is a market for central bank digital currencies, stablecoins, and digital deposits, but digital deposits may be the ultimate winner.
• ▪Megan Greene compared the race between central bank digital currencies, stablecoins, and tokenized deposits to a tortoise, hare, and rhino respectively, predicting tokenized deposits would win.
• ▪Bank of England policymaker Megan Greene predicted on May 31, 2026 that tokenized deposits will replace stablecoins within five years.

Greene's stablecoin critique

• ▪Stablecoin issuance leveled off in recent months as of May 31, 2026.
• ▪Megan Greene stated on May 31, 2026 that some stablecoins are used for illicit purposes.
• ▪Megan Greene argued on May 31, 2026 that stablecoins take deposits away from commercial banks and may reduce the effectiveness of monetary policy.
• ▪Megan Greene argued on May 31, 2026 that stablecoins are not stable.
• ▪Megan Greene stated on May 31, 2026 that there are questions about how stablecoins are regulated.
• ▪Megan Greene spoke at a conference in Dubrovnik, Croatia on May 31, 2026.

Waller's stablecoin defense

• ▪Christopher Waller spoke on the same panel as Megan Greene on May 31, 2026.
• ▪Christopher Waller stated on May 31, 2026 that stablecoins are just a payment instrument that brings competition into the payments world.
• ▪Christopher Waller stated on May 31, 2026 that stablecoins are used for cross-border payments and are scaring banks.
• ▪Christopher Waller argued on May 31, 2026 that banks view stablecoins as a threat, evidenced by their lobbying efforts to stop them.
• ▪U.S. Federal Reserve policymaker Christopher Waller defended stablecoins on May 31, 2026 as a financial innovation that may reduce costs.

Commercial bank incentives

• ▪Megan Greene stated on May 31, 2026 that tokenized deposits will become the ultimate winner once commercial banks recognize they are otherwise going to lose traditional bank deposits.
• ▪Megan Greene stated on May 31, 2026 that digital deposits have not taken off because commercial banks do not want to lose fees.
• ▪Megan Greene predicted on May 31, 2026 that commercial banks will lose fees anyway and will put more effort into developing digital deposits once they realize this.

Perspective of U.S. Federal Reserve (Christopher Waller)

• ▪Christopher Waller argued on May 31, 2026 that banks view stablecoins as a threat, evidenced by their lobbying efforts to stop them.
• ▪U.S. Federal Reserve policymaker Christopher Waller defended stablecoins on May 31, 2026 as bringing competition into the payments world that scares banks.

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