“BIS Paper: Banks Could Slow Stablecoin Growth by Paying Savers More” — what this page in the network covers. A new working paper from the Bank for International Settlements (BIS) suggests that traditional banks could curb the rapid expansion of stablecoins simply by offering higher interest rates on deposits. The study found that a mere 1 basis point increase in U.S. bank deposit rates is associated with a slowdown in stablecoin growth, reducing ten-week growth from 15% to 12%.
This finding highlights the direct competition between bank deposits and stablecoins for savers' funds, especially in a high-interest-rate environment. The paper underscores the sensitivity of stablecoin demand to the opportunity cost of holding non-interest-bearing digital dollars. When banks raise deposit rates, the appeal of stablecoins—often used for transactions and as a store of value—diminishes, as users can earn more by keeping money in traditional accounts. This listing links straight to the original page, where the content is available in full.