Nobel Laureate Warning: Insufficient Stablecoin Regulation Could Lead to Government Bailouts
BlockBeats News, September 1st, according to the Financial Times, Nobel Prize-winning economist Jean Tirole warned that the current regulation of stablecoins is "insufficient," and if these tokens were to collapse in a future financial crisis, the government may be forced to inject billions of dollars for a bailout. In an interview, the 2014 Nobel Prize-winning economist said he is "very, very concerned" about the regulation of stablecoins and the possibility of a bank run if there is doubt about the underlying reserve assets tied to these digital tokens.
Tirole stated that although stablecoins may be perceived as "absolutely safe deposits" in the eyes of ordinary users, they could actually become a source of loss, triggering calls for costly government bailouts. He also warned that using U.S. Treasury bonds as the backing asset for stablecoins may become unpopular due to the relatively low yields of these underlying assets. Therefore, stablecoin issuers may be incentivized to invest in "higher-yielding but riskier" alternative assets. (ChainDD)
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