Fed’s Waller says stablecoins could extend reach of U.S. monetary policy

[Federal Reserve Boards Meets To Discuss Capital Requirements For Big Banks]

Federal Reserve Governor Christopher Waller said the growing use of dollar-backed stablecoins could strengthen the global influence of U.S. monetary policy, while reiterating his skepticism toward central bank digital currencies, or CBDCs.

Speaking at a conference in Dubrovnik, Croatia, Waller said countries that increasingly rely on stablecoins tied to the U.S. dollar may effectively import U.S. monetary conditions, Bloomberg News reported Sunday.

“Countries that adopt it, it’s like a fixed exchange rate system,” Waller said. “You are going to import US monetary costs, so it’s broadening the reach of US monetary policy in countries that use more stablecoins.”

Waller has previously argued that stablecoins could reinforce the dollar’s role in the global financial system, provided the market operates under clear regulatory rules. Stablecoins are digital assets designed to maintain a fixed value, typically backed by reserves such as U.S. dollars or Treasury securities.

He also criticized efforts to develop central bank digital currencies, arguing they have yet to solve a problem that existing payment systems cannot address.

“There’s nothing that requires a CBDC and only a CBDC to fix,” Waller said, calling the concept “a solution in search of a problem.”

Waller contended that enthusiasm for CBDCs has faded among many central banks.

“Almost every major central bank in the world has just stopped” pursuing CBDCs, he said. “They just can’t find a reason for this.”

During a panel discussion led by incoming European Central Bank Vice President Boris Vujcic, Waller said only a handful of major institutions remain committed to launching digital currencies.

“Only the ECB and the Chinese” are pursuing CBDCs, he said.

Referring to China's digital yuan project, Waller added:

“Two banks, and nobody in China uses the thing anyway; they like WhatsApp and Alipay, they don’t even use the stupid thing.”

Vujcic pushed back on that characterization, noting that the ECB’s digital euro initiative represents the collective effort of the euro zone’s 21 member countries.

The ECB plans to introduce a digital euro later this decade, arguing that it could reduce Europe’s dependence on U.S.-based payment networks and help counter the growing influence of dollar-backed stablecoins. ECB President Christine Lagarde has also warned that stablecoins, including euro-denominated versions, could create risks for financial stability and complicate monetary-policy transmission.

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