Stablecoins are moving into the financial mainstream
Private digital tokens are becoming a regulated part of the financial system
Financial history is clear: innovations that start on the regulatory fringe but scale into money do not stay outside the system for long. From eurodollars to shadow banking, private money only becomes durable once it is pulled into the regulated core and anchored to central-bank credibility. Stablecoins are on exactly this path.
Writing in Project Syndicate, Stablecoins Are Inevitable, 21 November, Professor Lucrezia Reichlin believes the open question is not whether they will be integrated, but how. The EU’s MiCA regime embeds stablecoins neatly within the existing two-tier monetary system, privileging institutional clarity but risking slower innovation. The US approach is messier but more permissive, edging toward a new class of prudentially supervised non-bank issuers that function like narrow banks. Different architectures, same destination.
As stablecoins blur into deposits, regulators will converge on functional equivalence: money-like liabilities will face bank-like oversight, and if they matter systemically, they will need access—direct or indirect—to the central bank’s balance sheet. The likely outcome is not the eclipse of banking, but its digital reincarnation: private tokens on public blockchains, backed by public trust.
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