Summary
- Jean Tirole, winner of the Nobel Prize in Economics, warned that if confidence in stablecoins is shaken, large-scale redemptions and the possibility of government bailouts could occur.
- He pointed out that the composition of reserves and the incentive to invest in risky assets are important risks.
- Tirole said that current regulation is not sufficient and that market supervision alone has limits in mitigating risks.
Jean Tirole, winner of the Nobel Prize in Economics, warned in an interview with the Financial Times (FT) on the 1st (local time) that if confidence in stablecoins is shaken, large-scale redemptions could occur and the government might undertake massive bailouts.
Tirole pointed out, "Individual investors perceive stablecoins as safe deposits," and "If losses occur, the government will face political pressure to intervene in the market."
He cited the composition of reserves as the biggest risk. Tirole explained, "US Treasuries remain popular, but considering inflation, real yields can fall into negative territory," and "Because of this, issuers may turn to risky assets in search of higher returns."
He added, "Market supervision can mitigate some risks, but current regulation is insufficient due to political and fiscal interests surrounding virtual assets (cryptocurrencies)."
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
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