Stablecoin Demand May Influence U.S. Interest Rates, Says Fed Governor

U.S. Federal Reserve Governor Stephen Miran, appointed by U.S. President Donald Trump, highlighted the potential impact of stablecoins on interest rates during the BCVC summit in New York. Miran suggested that the increasing demand for U.S. dollar-pegged crypto tokens could exert downward pressure on the neutral rate, or r-star, which neither stimulates nor impedes economic activity. A decrease in the neutral rate could prompt the central bank to lower its interest rates accordingly.
The current market capitalization of stablecoins stands at $310.7 million, as reported by CoinGecko. Miran indicated that Federal Reserve research projects this market could expand to $3 trillion within the next five years. He emphasized that stablecoins are already boosting demand for U.S. Treasury bills and other dollar-denominated liquid assets, particularly from international purchasers, and this trend is expected to continue. Miran described stablecoins as a potential multitrillion-dollar factor for central bankers to consider.
Concerns have been raised by organizations such as the International Monetary Fund, which warns that stablecoins could pose a threat to traditional financial assets and services by competing for customers. U.S. banking groups have also called on Congress to enhance oversight of stablecoins with yield, arguing that they might attract potential bank users away from traditional banking services.
In his address, Miran commended the GENIUS Act for establishing clear guidelines and consumer protections, which he believes will be crucial for the broader adoption of stablecoins. Despite his usual skepticism towards new regulations, Miran expressed optimism about the GENIUS Act, noting that it provides a framework for legitimacy and accountability similar to that of traditional dollar assets. He highlighted that the Act mandates U.S.-based issuers to maintain reserves backed on at least a one-to-one basis in safe and liquid U.S. dollar-denominated assets, which is vital for monetary policy.
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