In a panel discussion at the Bloomberg New Economy Forum in Singapore, Franklin Templeton CEO Jenny Johnson raised alarms about stablecoins potentially destabilizing the financial system by redirecting funds from bank deposits to U.S. Treasuries. Johnson highlighted that the $300 billion stablecoin market, dominated by tokens like USDC and USDT, competes with bank deposits by offering yields backed by short-term government debt, which could reduce lending to consumers and corporations. She questioned whether banks can adapt by integrating blockchain technology to retain deposits, warning that excessive capital outflows might disrupt credit creation mechanisms.
"Stablecoins give funding to the US Treasury, away from the consumer in a bank," Johnson stated, emphasizing the irony that while stablecoins reinforce dollar dominance globally, they may hollow out traditional banking functions. The discussion also touched on Bitcoin's role as a hedge against government overreach, with Johnson noting that investors in regions like the Middle East view it as a safeguard against asset freezes or confiscation.
Separately, Aave launched its new 'Aave App,' a consumer-facing neobank product offering up to 9% yield on savings, $1 million in balance protection, and support for 12,000 banks and cards. This move positions Aave, a leading DeFi protocol with over $30 billion in deposits, in direct competition with traditional and fintech banks by leveraging crypto-native advantages like 24/7 liquidity and global reach. The app, currently in early access on iOS, aims to attract non-crypto users with features like automated savings and enhanced security, challenging incumbent financial institutions with higher yields and better insurance coverage.
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