A new analysis published by economists affiliated with the White House has offered a different perspective on the increasingly heated stablecoin debate. According to the report, the risks to the banking system from yield programs offered through stablecoins remain quite limited. This assessment directly contradicts the "deposit flight" concerns frequently voiced by banks and industry representatives.
The balance is shifting in the stablecoin yield debate
The study, prepared by the White House Council of Economic Advisors (CEA), calculated that banning stablecoin yields would only increase banks' lending capacity to a very limited extent. According to the model, such a ban would increase the total volume of loans in the banking system by approximately $2.1 billion. This increase corresponds to only 0.02 percent of total loans. Moreover, it is stated that this limited gain would create a loss of welfare of approximately $800 million for consumers.
Another point that stands out in the report is the emphasis that stablecoin reserves are largely already located within the traditional financial system. According to economists, even if users transfer their assets to stablecoins, these funds generally return to the financial system through instruments such as bank deposits or US Treasury bonds. Therefore, the amount of liquidity leaving the system remains quite low. Estimates suggest that only about 12% of stablecoin reserves remain outside the lending mechanism. These findings stand in stark contrast to more pessimistic scenarios from the banking sector. Specifically, the Independent Community Bankers of America suggested that if interest-bearing stablecoins become widespread, banks could lose up to $1.3 trillion in deposits, leading to an $850 billion contraction in lending volume. Similarly, some major bank executives warn that stablecoins could directly compete with the banking system. However, White House economists believe such scenarios are based on extreme assumptions. The report states that even with the most adverse conditions cumulative, the impact on the banking system would remain limited. For example, even in an aggressive scenario like a sixfold growth in the stablecoin market, the increase in the loan volume of community banks is estimated to be only 6.7 percent. At the heart of the discussions are new regulations underway in the US. In particular, the bill known as the "Clarity Act" seeks to clarify whether stablecoin yields can be offered directly or indirectly. In this process, the GENIUS Act, passed last year, imposed a one-to-one reserve requirement on stablecoin issuers and limited direct interest payments. On the other hand, the Federal Deposit Insurance Corporation is also working on a new supervisory framework for stablecoin issuers. All these developments are leading to an intense lobbying struggle between crypto companies and the traditional banking sector. Crypto companies argue that stablecoin yields offer a competitive alternative for users and can increase financial inclusion. In response, banks state that such products pose significant risks, especially for small and local banks.
