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

According to Jin10 data, the Financial Times reported that Nobel laureate Jean Tirole warned that current regulation of stablecoins is “insufficient”. If these tokens were to collapse in a future financial crisis, the government might be forced to inject billions of dollars for bailouts. In an interview, the 2014 Nobel Prize winner in Economics stated that he is “very, very concerned” about the regulation of stablecoins, and if doubts arise regarding the underlying reserve assets linked to these digital tokens, depositors might initiate a bank run. Tirole stated that although stablecoins may be seen as “absolutely safe deposits” by ordinary users, they could become a source of losses and trigger calls for the government to spend huge sums for bailouts. He also warned that using U.S. Treasury bonds as collateral for stablecoins may become unpopular due to the relatively low yields of these underlying assets. Therefore, issuers of stablecoins may be tempted to invest in “higher-yield but riskier” other assets.