BoE's Megan Greene says The popularity of stablecoins could soon fade

BoE's Megan Greene: "Stablecoin's popularity could soon fade, replaced by tokenised deposits, or digital versions of traditional bank deposits."

At first glance, that sounds controversial. But for institutional payments, it isn't.

Here's why.

1️⃣ Tokenized deposits don't create a new form of money and the risks that come with it

Tokenized deposits simply upgrade the technology behind the money institutions already use.

Instead of relying on batch processing, limited operating hours, and fragmented messaging systems, tokenized deposits enable near real-time, programmable, 24/7 settlement while remaining within the existing banking and regulatory framework.

👉 In other words:

- Stablecoins create a new payment rail (and new risks)

- Tokenized deposits modernize the payment rail institutions already trust.

The result: JPMorgan's Kinexys Digital Payment already moves more in a month than stablecoin payments move in a year. Institutional market is simply much larger than retail cross-border flows.

2️⃣ The second challenge for stablecoins is USD dollarization

Despite the industry's discussion around payment efficiency, the market has overwhelmingly converged around USD-denominated stablecoins.

That creates a strategic dilemma for every country outside the United States.

Widespread adoption of USD stablecoins increases digital dollarization and entrenches geopolitical reliance on the US, weakening the role of local currencies in payments and savings.

This is why EU is putting up defence in digital EURO, China in e-CNY and EM countries such as South Africa in banning payment eligibility of stablecoins.

👉 By contrast, tokenized deposits avoid this problem.

The technology upgrades the payment rail and currency already in place. The monetary sovereignty stays intact.

That makes tokenized deposits a particularly compelling proposition for domestic and cross-border institutional payments.

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