A study published by the Bank for International Settlements (BIS) suggests that banks could slow the growth of stablecoins by offering customers higher deposit interest rates.
The growing adoption of stablecoins has raised concerns among banks that customers may move their savings into other products. A BIS working paper focuses on one tool banks have in this competition: the interest paid to savers. The findings show a link between more attractive deposit yields and slower growth in stablecoins’ market value.
Researchers Rashad Ahmed and Iñaki Aldasoro examined weekly data from January 2019 to June 2025. Their calculations also took into account Bitcoin prices, U.S. Treasury yields, and overall financial conditions.
A small rate change, a noticeable difference in growth
In the baseline estimate, a 1-basis-point increase in average bank deposit rates over one week—that is, 0.01 percentage points—was associated with average stablecoin growth of about 12% instead of 15% over the following ten weeks. The measure here is not the price of stablecoins, but growth in their total market value.
In an alternative method that accounted for the possibility that banks might also raise rates in response to stablecoin growth, the effect was about three times stronger. In this estimate, which the authors preferred, growth over ten weeks slowed to as low as 6%. The researchers also noted that the method had some weaknesses; growth remained positive in both calculations.
The relationship between interest rates and growth was stronger for Circle’s USDC than for Tether’s USDT. The authors say this difference is consistent with USDC’s closer ties to U.S. users.
Banks’ concern: Where customers keep their money
In January, Bank of America CEO Brian Moynihan warned that up to $6 trillion in deposits could shift to yield-bearing stablecoins and similar products. This was not an actual outflow of money, but a risk scenario that could also affect banks’ ability to lend.
However, money does not have to leave the banking system entirely. According to a December analysis by Fed staff, when stablecoin issuers keep their reserves in banks, the money users transfer can return to the system as issuer deposits. This means the composition of the customers funding a bank can change even if total deposits remain the same.
Larger balances outside the scope of deposit insurance could require banks to hold more liquid assets and limit their capacity to allocate funds to long-term loans. On the other hand, paying higher rates to retain customers also increases a bank’s funding costs. The Fed analysis says banks may offer better rates especially to customers who are more likely to switch to other products.
The BIS study’s dataset covers only one period of high interest rates, and its findings do not establish that banks have experienced actual deposit or lending losses. The growing adoption of yield-bearing stablecoins and tokenized money market funds could shift the balance in this competition in the future.
Not investment advice.