PANews reported on July 19 that according to The Block, Morgan Stanley analysts stated that regulators outside the United States, including the Bank of England, seem to favor tokenized bank deposits over stablecoins, as these two models compete for future positions in the digital financial field. Analysts, including Morgan Stanley Managing Director Nikolaos Panigirtzoglou, cited recent comments by Bank of England Governor Andrew Bailey, who is more inclined towards banks providing tokenized deposits rather than issuing their own stablecoins. This may indicate a general preference in overseas regulation.
Tokenized deposits refer to commercial bank deposits recorded on blockchain infrastructure. Analysts point out that they retain the protections and support of traditional deposits, such as deposit insurance, capital requirements, last-resort lender support, and compliance with Anti-Money Laundering/Know Your Customer (AML/KYC) rules, while also possessing programmability and blockchain interoperability.
Tokenized deposits can be divided into two forms: bearer deposits (transferable, like stablecoins) and non-bearer deposits (non-transferable, settled at face value between banks). Analysts suggest that regulators are more likely to support the non-bearer version of currency, as it helps maintain "monetary uniqueness" - a core principle of the financial system that ensures different forms of money can be exchanged at face value. On the other hand, bearer tokenized deposits and stablecoins may deviate from their pegged levels due to market factors such as credit risk or liquidity imbalances. They noted that this was evident in past crises involving Terra, FTX, and Silicon Valley Bank.
