Stablecoin proliferation triggers banking sector tension… dual pressure from deposits and fees

Domestic banking industry analysis suggests that, with the popularization of “stablecoins,” structural changes will be unavoidable. Diagnostics indicate that deposit outflows and reduced transaction fees are occurring simultaneously, potentially undermining traditional profit models.

On the 10th, Lee Dae-ki, senior research fellow at the Korea Institute of Finance, stated in the report “The Impact and Implications of Stablecoin Activation on the Banking Industry” that if stablecoins become a payment method, banks’ liquidity and profitability may be under pressure at the same time. Stablecoins are digital assets based on fiat currency that reduce value volatility; unlike existing cryptocurrencies, they are directly used for actual payments and remittances, thus having a significant impact.

Deposit Loss · Reduced Transaction Fees “Dual Pressure”

The report points out that when stablecoins spread, the core risk is seen in the structure where some bank deposits transfer to the issuer’s reserves. In this case, banks’ sources of loan funds will decrease, some payment functions will be replaced, leading to a decline in fee income.

The structure of domestic banks is more vulnerable to such changes. The won loan-to-deposit ratio of Korean commercial banks ranges between 100% and 110%, far exceeding the global average of about 80%. When deposits alone cannot support loans and banks heavily rely on external funds such as bank bonds, further deposit outflows could make loan reduction or increased financing costs unavoidable.

The situation is similar for internet banks. If the low-cost funding structure centered on demand deposits weakens, it could directly burden their profitability.

Opportunities Coexist… Redefining the “Role of Banks”

However, the report believes that stablecoins are unlikely to directly replace banks in the short term. The reason is that the trust and customer base accumulated in the entire financial system are core assets that are difficult to replace quickly.

Based on this, the report also provides space for banks to create new profit models. For large commercial banks, strategies discussed include issuing their own “Korean won stablecoins” or providing payment infrastructure to directly participate in the ecosystem. This is similar to JPMorgan Chase in the U.S., which creates revenue through blockchain payment systems in settlement, liquidity management, and data services.

The report further suggests that internet banks, while introducing stablecoin services, should also diversify their financing structures.

Parallel to CBDC… Cautious System Design Needed

The report also emphasizes the necessity of policy responses. It suggests that stablecoins could serve as a supplementary tool to central bank digital currencies (CBDCs) to improve the efficiency of the digital currency ecosystem. Additionally, it proposes considering depositing a certain proportion of reserves into banks.

However, the report clearly states that, given the high loan-to-deposit ratio structure of domestic banks, system design must be cautious. Reserve regulation might instead introduce new liquidity risks.

The research fellow emphasizes: “The impact of stablecoins on the financial system is more akin to structural change than a simple technological innovation,” and “the banking industry should actively participate in regulatory discussions to ensure long-term competitiveness.”

As stablecoins alter the payment and liquidity landscape, domestic banks are being asked to respond not by choosing between threats and opportunities, but by formulating strategic responses.

TP AI Notice: This article has been summarized using a language model based on TokenPost.ai. The main content may be omitted or inconsistent with facts.