Banks could slow stablecoin growth by paying savers more, BIS paper finds

Bank deposits and stablecoins are competing ways to park dollars, and the BIS paper puts that competition into a measurable frame. U.S. bank deposit rates matter here because they set the return on traditional cash balances, while stablecoins such as Circle’s USDC offer an on-chain alternative. The finding is appearing now as regulators and banks keep debating how digital dollar products fit beside the existing banking system.

For people using or building around stablecoins, the practical takeaway is that changes in bank deposit rates can shift demand for tokenized dollars. That means wallets, exchanges, and payment products built around stablecoins may need to watch bank pricing as closely as crypto-market factors. It also suggests Circle’s USDC may face stronger competition from ordinary bank accounts than some other stablecoins.

The wider trade-off is between an open, programmable payment rail and the pull of the banking system’s interest rates. When yield on bank deposits rises, the case for holding money in a stablecoin gets harder to separate from the case for leaving it in a bank account. That tension matters because stablecoins are often discussed as payment infrastructure, while banks still control the most familiar dollar balance sheet. (per crypto.news)

What is still open is how far this relationship extends across different issuers, currencies, and rate environments beyond the 10-week window in the paper. The published material does not settle whether the same pattern holds outside U.S. deposits or across all stablecoin designs. A fuller answer would come from more data on how stablecoin balances move after bank rate changes in other markets and over longer periods. (per cryptobriefing.com)