Nobel laureate warns: Lack of regulation of stablecoins could lead to governments being forced to provide assistance.

According to the Financial Times, Nobel laureate in economics Jean Tirole has warned that the current regulation of stablecoins is "insufficient", and if these tokens collapse in a future financial crisis, governments may be forced to inject billions of dollars for a bailout. In an interview, the 2014 Nobel laureate in economics stated that he is "very, very concerned" about the regulation of stablecoins, and if there is doubt about the underlying reserve assets linked to these digital tokens, depositors may run on the banks. Tirole noted that although stablecoins may be seen as "absolutely safe deposits" in the eyes of ordinary users, they could actually become a source of loss and trigger calls for government bailouts. He also warned that using US Treasury bonds as the underlying assets to back stablecoins may become unpopular, as the yield on these underlying assets is relatively low. Therefore, stablecoin issuers may be incentivized to invest in "higher return but higher risk" assets.