Stablecoins: Banks Can Curb Their Growth Through Savings

A slight increase in interest rates on bank deposits could slow the growth of stablecoins. This is the conclusion of a study by the Bank for International Settlements (BIS), which highlights a competition between bank savings and these cryptocurrencies pegged to traditional currencies. However, the effect varies depending on the players: Circle's USDC appears to be more sensitive to this competition than Tether's USDT.

In Brief

• A one basis point increase in deposit rates reduces the growth of stablecoins over ten weeks, from 15% to 12% in the main estimate, and down to 6% in an alternative estimate.
• USDC reacts more than USDT, particularly due to its closer ties with American users.
• The study does not prove a flight of bank deposits or a decrease in credit. It also highlights the limitations of an analysis conducted during a period of high rates.

Higher Savings Rates to Slow Stablecoins

The question of the links between banks and stablecoins continues to fuel debates. Tether already contested, at the end of August, the BIS's reading on tokenized deposits. This time, the institution moves to data analysis with a study signed by Rashad Ahmed and Iñaki Aldasoro.

The researchers studied weekly U.S. data from January 2019 to June 2025. They notably took into account benchmark rates, bond yields, the dollar, and stock market volatility.

Their findings are striking: a one basis point increase, or 0.01 percentage points, reduces the growth of stablecoins over ten weeks from about 15% to 12%. Another estimate, which corrects for banks' reactions in setting their rates, brings this growth down to around 6%.

Why? The rates offered by banks do not mechanically follow those of the central bank. They change little when rates remain low, then adjust more sharply beyond a certain threshold.

The researchers use this difference to measure the effect of rates on stablecoins. Their results withstand several tests, including excluding the Silicon Valley Bank episode.

USDC and USDT, Different Sensitivity to Bank Rates

The study also notes a difference between the two main stablecoins. Circle's USDC reacts more to changes in deposit rates than Tether's USDT. The researchers attribute this gap to Circle's proximity to American users.

The results do not seem to reflect a simple general trend in the crypto market either. A complementary test does not show the same link between the instrument used by the researchers and the growth of other cryptocurrencies.

Moreover, a note from the Federal Reserve explains that funds placed in stablecoins can return to the banking system in the form of deposits held by issuers. Deposits do not necessarily disappear, but their distribution changes. However, banks may need to hold more liquid assets if they rely on more volatile funding.

Limitations of the Study and Open Questions

However, caution is needed not to draw excessive conclusions. The study does not demonstrate an actual decrease in deposits or a contraction in credit. Additionally, it covers only one episode of high rates. Interest-bearing stablecoins and tokenized money market funds could also alter this competition by directly offering a yield to their holders.

On the regulatory front, the Federal Reserve proposed at the end of September a two-day deadline to reimburse stablecoin holders. In January, the head of Bank of America also mentioned the risk of seeing several trillion dollars leave bank deposits.

Ultimately, banks have a simple lever to remain competitive: better compensate savings. The competition with stablecoins therefore does not rely solely on technology but also on the yield offered to liquidity holders.