Banks can curb stablecoins growth by paying their deposits better, according to BIS

More attractive remuneration of deposits against cryptocurrency

Traditional banking institutions could curb the growth of stable cryptocurrency by increasing the remuneration paid to their savers, according to a discussion paper published by the Bank for International Settlements (BIS) and reported by CoinDesk. The study focuses in particular on dollar-backed tokens such as Tether's USDT or Circle's USDC, whose rapid growth is attracting increasing attention from regulators and the financial sector.

Researchers Rashad Ahmed and Iñaki Aldasoro reviewed a series of weekly data covering the period from January 2019 to June 2025. Their work incorporates several market parameters, including the price of the bitcoin, the yield of US state loans and general financial terms. Their findings indicate that a minimal one-week increase in average bank deposit rates results in a measurable slowdown in the rate of expansion of these digital assets.

The impact of a baseline on stablecoins capitalisation

According to CoinDesk's detailed BIS report, an increase of one base point in average deposit rates, i.e. only 0.01 percentage points, is sufficient to reduce the rate of growth of stables. Over a 10-week reference period, the average increase in market capitalization of these assets thus increases from about 15% to about 12%.

In their preferred estimation model, which takes into account the fact that banks sometimes raise their rates in direct response to the growth of stable cryptocurrency, the authors observe an impact about three times greater. With this approach, the ten-week increase slows down to around 6%, although researchers point out some methodological weaknesses associated with this calculation. The study states that in both cases growth dynamics are slowed, but not reversed.

Moreover, this statistical link appears more pronounced for Circle USDC than for Tether's USDT. Rashad Ahmed and Iñaki Aldasoro explain this discrepancy by the USDC's closer ties with users in the United States.

Banking sector fears about liquidity and credit

These observations are taking place in a context of growing concerns expressed by banking leaders, CoinDesk points out. In January, the Managing Director of Bank of America, Brian Moynihan, warned that up to $6,000 billion in deposits could migrate to stablecoins and similar yielding products. Such a transfer of funds could restrict the lending capacity of financial institutions and increase borrowing costs to the economy.

The paper notes that the impacts depend in part on where stable cryptocurrency emitters place their reserves. According to a December analysis carried out by the Federal Reserve teams, the sums invested in stablecoins can actually return to the banking system in the form of deposits issued directly by the companies issuing these coins. In this case, the identity of the banks' liquidity providers changes, although the overall amount of deposits remains constant.

Management of funding costs subject to limits

However, this change in the structure of deposits is not without risk for bank balance sheets. Larger and uninsured balances may force banks to retain a higher share of highly liquid assets, thereby reducing the margin available for long-term credit, according to CoinDesk's Federal Reserve work.

In order to maintain customer loyalty and avoid capital outflows, institutions can increase the remuneration of accounts, but this strategy in turn increases their own financing costs. The Fed's analysis suggests that one solution would be to offer enhanced rates only to the profiles of depositors most likely to switch to cryptocurrency, while maintaining lower conditions for the least mobile customers.

The authors of the BIS study nevertheless point out that their document does not establish actual losses in respect of deposits or bank loans. The sample analysed includes only one episode of high rates, and these dynamics may evolve as paid stables and money funds develop in the form of tokens. Rashad Ahmed and Iñaki Aldasoro conclude that banks retain some influence on the pace of adoption through the pricing of their deposits.