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Nobel laureate warns: Inadequate regulation of stablecoins may force governments to provide bailout
Summary: According to the Financial Times, Nobel laureate in economics Jean Tirole has warned that current regulations on stablecoins are insufficient, and in the event of a future financial crisis leading to the collapse of these tokens, governments may be forced to inject billions of dollars for bailout. In an interview, the 2014 Nobel laureate expressed ...
According to the Financial Times, Nobel laureate in economics Jean Tirole has warned that current regulations on stablecoins are insufficient, and in the event of a future financial crisis leading to the collapse of these tokens, governments may be forced to inject billions of dollars for bailout. In an interview, the 2014 Nobel laureate expressed serious concerns about the regulation of stablecoins and the possibility of depositors rushing to withdraw if doubts arise about the underlying reserve assets linked to these digital tokens.
Tirole stated that although stablecoins may be perceived as absolutely safe deposits by ordinary users, they could actually become a source of losses and trigger calls for government intervention. He also cautioned that using US Treasury bonds as assets to support stablecoins may become unpopular due to the relatively low yields of these underlying assets. Therefore, stablecoin issuers may be tempted to invest in higher-return but riskier assets. (Sina Finance)
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