Federal Reserve Bank Governor Christopher Waller discussed the potential of stablecoins in advancing the current financial system, noting that their implementation could decrease the need for payment intermediaries and lower costs.

Role of Stablecoins in the Financial System

In his talk at the Institute of Advanced Studies, Christopher Waller noted that stablecoins could reduce the number of payment intermediaries. However, he emphasized that their safety is not assured. Waller further explained that if appropriate frameworks are established to minimize risks, such as the potential use of stablecoins in unlawful financial activities, they could provide substantial benefits by serving as a safe asset on new trading platforms.

Legislative Initiatives on Stablecoins

In October, U.S. Senator Bill Hagerty introduced the 'Clarity for Payment Stablecoins Act,' which builds upon Patrick McHenry's previous bill on stablecoins. The major changes include regulating stablecoins at the state level and removing the clause about their recognition as securities.

Level of Stablecoin Adoption in the US

Despite efforts to implement stablecoins, a recent Chainalysis report showed that the U.S. is lagging in adoption. The share of stablecoin transactions on U.S.-regulated exchanges fell below 40% in 2024, while offshore exchanges reported a 60% share.

Stablecoins have the potential to significantly impact the financial system, but their safe implementation requires thorough regulation and monitoring to minimize associated risks.