Fed and BoE Diverge on Stablecoins as CLARITY Act Moves Forward

At the 32nd Dubrovnik Economics Conference, a sharp divide emerged among senior policymakers over the future of private digital money — with the U.S. Federal Reserve and the Bank of England painting very different pictures of where stablecoins fit into the payments landscape. Federal Reserve Governor Christopher Waller defended stablecoins as a legitimate payment tool, telling the panel that they belong in the payments debate rather than being lumped into broader crypto risk concerns. “I’ve always just looked at stablecoins as a payment instrument; there’s nothing evil about it, nothing dangerous about it,” Waller said, adding that stablecoins can increase competition in payments and reduce costs, Reuters reported. He also warned that widespread use of dollar-backed stablecoins could cause countries to “import” U.S. monetary conditions, tying stablecoins into questions about dollar reach and monetary sovereignty. Bank of England policymaker Megan Greene struck a more cautious tone. While acknowledging the potential for digital innovation, she argued that tokenized deposits — digital representations of traditional bank deposits — may become more useful than stablecoins. “I think tokenized deposits are probably going to take over from stablecoins and five years from now, I suspect we might wonder why we were talking about stablecoins,” Greene said, noting that banks could respond to pressure on deposit balances and fee income by investing in digital-deposit infrastructure. She also flagged risks: stablecoins aren’t always stable, raise regulatory and illicit-use concerns, can siphon deposits from banks, and may weaken the transmission of monetary policy. The contrasting remarks underline how central banks view private digital money through different lenses: some see faster payments and increased dollar demand; others see deposit flight, regulatory gaps and strains on local policy tools. The debate comes as U.S. lawmakers press ahead with the CLARITY Act, a proposed digital-asset market structure bill that the Senate Banking Committee advanced 15–9 on May 14 after months of negotiation. A central flashpoint in the legislative fight is whether regulated stablecoin products should be allowed to offer yield-like rewards. Banking groups warn those rewards could pull deposits away from traditional lenders; crypto firms counter that regulated digital-asset products should be free to offer customer benefits. Senator Cynthia Lummis has urged Congress to move quickly, warning that if the CLARITY Act fails the next realistic chance for meaningful digital-asset legislation may not come until 2030. She has also framed the bill as a matter of U.S. financial leadership: “If the United States doesn't establish the global standard for digital asset regulation, someone else will,” she wrote on X, arguing the CLARITY Act is how America can ensure it shapes the rules of the next financial era. Takeaway: policymakers and markets are now navigating competing visions — private stablecoins, tokenized bank deposits, and regulatory frameworks — with major implications for payments, banking, and the global reach of monetary policy.