Nobel Prize-winning economist Jean Tirole raised red flags over stablecoins, saying he is “very, very worried” about how the assets are supervised.
In an interview with the Financial Times, the Toulouse School of Economics professor warned that shaken confidence in reserves could spark mass redemptions, forcing governments into expensive bailouts.
Stablecoin Can Result in “Runs” and Banking Crisis
Tirole, who won the Nobel Prize in Economics in 2014, warned that the prevalent optimistic scenarios of stablecoin’s growth amplify systemic risks. He said, “Retail investors often view stablecoins as a perfectly safe deposit.”
He cautioned that this perception could prove dangerous if reserves falter. Retail and institutional investors might suffer losses in that case, and governments would face sharp political pressure to intervene.
A primary concern lies in the composition of reserves. US Treasuries remain popular, but yields often turn negative once adjusted for inflation. That pushes issuers toward riskier assets in pursuit of higher returns.
According to Tirole, such a shift heightens the likelihood of losses within reserve portfolios. If stablecoins break their peg to the US dollar or other sovereign currencies, confidence could evaporate quickly. A destabilizing run might then force governments into costly rescues, mirroring past banking crises in which only a small number of uninsured depositors bore losses.
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