Nobel laureate in economics Jean Tirole has warned that current regulation of stablecoins is insufficient and could force governments to invest billions of dollars in bailouts if these tokens collapse during a future financial crisis. In an interview, the 2014 Nobel laureate in economics expressed his deep concern about the regulation of stablecoins and the potential for a run on their deposits if doubts arise about the underlying reserve assets pegged to these digital tokens.

Tirole stated that while stablecoins may be viewed as perfectly safe deposits by ordinary users, they can become a source of losses and trigger calls for massive government bailouts. He also warned that using U.S. Treasury bonds as stablecoin backing assets could become unpopular due to the relatively low yields on these underlying assets. Consequently, stablecoin issuers could be tempted to invest in other assets with higher returns but greater risk. (Zhitong Finance)