Central Banks Assess Stablecoin Threats to Bank Deposits and Policy

International central banking institutions are scrutinizing how reserve-backed stablecoins interact with commercial banking systems and monetary policy.

The background

European Central Bank official Isabel Schnabel and Bank for International Settlements researchers warned that stablecoins threaten monetary control, elevate run risks, facilitate capital-control evasion, and contribute to bank disintermediation [1].

Where things stand

Successive empirical papers from the Bank for International Settlements indicate that stablecoins serve as direct substitutes for traditional commercial bank balances [2], [3]. Economists examining data from 2019 through 2025 determined that elevated commercial bank deposit rates acted as a brake on overall stablecoin market expansion [2], [3].

The sensitivity to competitive fiat yields differs across assets. Economists identified a stronger contractionary drag on USD Coin ($USDC) reserves than on Tether ($USDT) holdings when savings yields increase [2], [3].

Why it matters

These findings provide central banks and global financial regulators with quantitative evidence that retail and institutional capital shifts between conventional bank deposits and digital currency tokens depending on nominal policy yields [2], [3]. Commercial banks face structural deposit competition, while central banks must evaluate how private digital currencies undermine capital-flow restrictions and sovereign policy transmission channels [1].