Nobel laureate warns: Insufficient regulation of stablecoins may force government bailouts

ChainCatcher news, according to Jinshi Data and the Financial Times, Nobel laureate Jean Tirole has warned that current regulation of stablecoins is "insufficient." He stated that if these tokens collapse during a future financial crisis, the government may be forced to inject billions of dollars for a bailout. In an interview, the 2014 Nobel Prize winner in Economics expressed that he is "very, very concerned" about the regulation of stablecoins and the possibility of a bank run if doubts arise about the underlying reserve assets linked to these digital tokens.

Tirole noted that while stablecoins may be viewed as "absolutely safe deposits" by ordinary users, they could actually become a source of losses and trigger calls for the government to spend huge amounts on bailouts. He also warned that using U.S. Treasury bonds as backing assets for stablecoins may become unpopular due to the relatively low yields of these underlying assets. As a result, stablecoin issuers may be tempted to invest in "higher-yield but riskier" other assets.