The biggest asset manager in Europe has expressed worries that the surge in dollar-backed stablecoins following the US GENIUS Act may result in a significant change in money flows that would destabilize the international payment system.
The GENIUS Act, a plan to establish a regulatory framework for U.S. dollar-pegged cryptotokens, was approved by the U.S. Senate last month.
If their citizens purchase them, other nations fear a wave of so-called “dollarization” of economies.
It is anticipated to be accepted by President Donald Trump and passed by the House of Representatives.
“It could be genius, or it could be evil,” Vincent Mortier, chief investment officer at Amundi Asset Management, told reporters about the U.S. statute.
Although some estimates have put the number of stablecoins in circulation as high as $2 trillion, JPMorgan anticipates that it will roughly double to $500 billion over the next five years.
The U.S. statute requires stablecoins to be dollar-pegged, which will lead to the purchase of U.S. Treasury bonds.
As the United States struggles with a massive fiscal deficit, it offers advantages for the country, but it may also cause issues for other nations.
“In doing so, you create an alternative to the U.S. dollar, and that could lead to more weakening of the dollar,” said Mortier.
“Because if a country is pushing a stablecoin, it could be perceived as pushing the message that the dollar is not that strong.”
Over 80% of stablecoin transactions take place outside of the US, even though 98% of all stablecoins are now based on the dollar.
Giancarlo Giorgetti, Italy’s finance minister, issued a warning in April that Trump’s trade war was not the only threat to European financial stability; the U.S. stablecoin policies were an “even more dangerous” threat.
He contended that millions of individuals would find it appealing to have access to dollars without requiring a U.S. bank account, which might compromise nations’ monetary sovereignty.
A similar warning about the dangers of stablecoins was released by the Bank for International Settlements, which pointed out that they might jeopardize monetary sovereignty, cause problems with transparency, and increase the risk of capital flight from developing nations.
Although he hasn’t decided on stablecoins yet, Mortier, who is in charge of Amundi’s 2 trillion euros ($2.36 trillion) in assets, none of which are in cryptocurrency, expressed concern that a widespread adoption could have an effect on financial stability.
He claimed that in addition to the dollarization problem, they would turn into “quasi-banks” since customers would deposit money in coins with the understanding that they could withdraw it whenever they desired.
Additionally, they will serve as a direct payment method.
“It could potentially destabilize the global payment system,” he stated. “I’m not so sure it’s a good idea”.
