Fed's Waller: "Stablecoin Proliferation Will Further Expand U.S. Monetary Policy Influence"

Christopher Waller, a member of the U.S. Federal Reserve Board, argued that the proliferation of stablecoins could further expand the global influence of U.S. monetary policy.

According to Bloomberg News on May 31 (local time), Governor Waller stated at an event in Dubrovnik, Croatia, "Countries that adopt stablecoins will, in effect, find themselves in a situation similar to a fixed exchange rate system," adding, "Since they are essentially importing the costs of U.S. monetary policy, the influence of U.S. monetary policy will spread to a broader area."

Waller, U.S. Fed Governor, Holds Policy Dialogue with Bank of Korea Governor. Yonhap News

He had also expressed in a speech in February last year that stablecoins could help strengthen the U.S. dollar's status as the world's key currency. However, he emphasized that this must be premised on the establishment of clear regulatory frameworks and supervisory mechanisms.

Stablecoins are digital assets designed to minimize price volatility by linking their value to safe assets such as the U.S. dollar or U.S. government bonds. Issuers typically promise to hold U.S. dollar deposits or U.S. Treasury bonds equivalent to the amount of tokens issued.

On this day, Governor Waller expressed strong skepticism about central bank digital currencies (CBDCs). He criticized, "There is no problem that only CBDCs can solve," and described it as "an example where the solution comes before the problem."

He continued, "That is why most of the major central banks around the world have effectively halted their CBDC initiatives," adding, "They simply cannot find a convincing reason for why they are needed."

During a panel discussion moderated by Boris Vujcic, the incoming Vice President of the European Central Bank (ECB), Governor Waller contended, "Currently, only the ECB and China are actively advancing CBDC projects." He also remarked on China's digital yuan, saying, "Even Chinese citizens hardly use it," and observed, "They much prefer WeChat Pay and Alipay."

However, Vice President Vujcic immediately refuted this. He said, "A correction is needed," emphasizing that "the central banks of 21 eurozone countries are currently pursuing the introduction of CBDCs."

The ECB aims to launch a pilot program for the digital euro as early as next year, with the goal of officially introducing it by 2029. Europe is pursuing the digital euro project to reduce reliance on U.S. payment networks such as Visa and Mastercard, and to respond to the spread of dollar-based stablecoins.

Meanwhile, Christine Lagarde, President of the ECB, recently expressed caution regarding stablecoins in a speech. She pointed out that even euro-denominated stablecoins carry risks that could undermine financial stability and the transmission channels of monetary policy.

This content was produced with the assistance of AI translation services.