EXPERT OPINION | ‘Tokenized Deposits Are Probably Going to Take Over from Stablecoins ​5 Years from Now,’ Says Bank of England Policymaker

The debate over stablecoins may be missing a bigger shift taking place inside banking.

At a central banking conference in Croatia, Bank of England policymaker, Megan Greene, argued that tokenized deposits, which are on-chain versions of traditional bank deposits, could overtake stablecoins within five years predicting markets may eventually ‘wonder why we were talking about stablecoins’ in the first place.

The comments highlight how rapidly tokenized deposits are moving from theory to strategic priority for commercial banks.

Unlike stablecoins, which are typically issued by crypto firms and backed by reserves, tokenized deposits are issued directly by banks allowing institutions to keep customer funds within the regulated banking system while gaining the speed and programmability of on-chain payments.

Greene said banks have so far been reluctant to embrace the model because it threatens existing fee structures. However, as stablecoins continue gaining traction, she expects lenders to accelerate investment in tokenized deposit infrastructure rather than risk losing deposits to digital asset networks.

“I like to think of it as a massive race between the tortoise, the hare and the rhino.” Greene said.

“The tortoise is the central ⁠bank ​digital currency …the hare is stablecoins and the rhino is tokenized ​deposits. We’ll probably end up with all three, but if I had to put money in one … it would be the ​rhino, tokenised deposits, which I think will probably take off.”

Her remarks come as banks across Europe, the U.S. and Asia increasingly explore tokenized money as the next layer of financial market infrastructure alongside the broader push toward tokenized securities and real-world assets. Industry advocates argue tokenized deposits could offer the trust of regulated banks while enabling instant settlement and programmable transactions.

The view contrasts sharply with that of Federal Reserve Governor, Christopher Waller, who defended stablecoins as a payment innovation capable of expanding the global reach of the U.S. dollar and increasing competition in payments.

The divergence underscores a growing battle over the future of digital money: whether crypto-native stablecoins become the dominant settlement asset or whether banks successfully migrate trillions of dollars in deposits onto blockchain rails before stablecoins can fully displace them. For an increasing number of policymakers, the real growth story may no longer be stablecoins themselves, but the tokenization of the banking system behind them.

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