Central Bank Research Suggests Higher Savings Rates Can Slow Stablecoin Growth, But Traditional Banks Face Ongoing Pressure

For traditional financial institutions increasingly anxious about losing valuable customer deposits to the booming digital asset economy, a familiar yet potent counterweight may already be sitting in their toolkit: the interest rate offered on a standard savings account.

That is the core conclusion of a new working paper published by the Bank for International Settlements (BIS), the Basel-based institution often described as the central bank for the world’s central banks. Analyzing weekly U.S. data spanning from January 2019 through June 2025, BIS economist Iñaki Aldasoro and Rashad Ahmed of the Andersen Institute for Finance and Economics discovered a clear empirical pattern: the rapid expansion of stablecoin market capitalization tends to decelerate when traditional commercial banks make the move to raise their deposit rates.

The findings offer a nuanced perspective on the competitive dynamics unfolding between traditional fiat banking and decentralized finance. While stablecoins—digital tokens pegged to fiat currencies like the U.S. dollar—have continued to capture market share, the research suggests that traditional lenders are far from helpless. By adjusting the yields they offer on ordinary savings products, commercial banks retain a tangible degree of leverage over how quickly their customer base adopts alternative digital payment instruments.

The Mechanics of Slowing Adoption

To understand how traditional banking products impact digital token expansion, the researchers examined historical growth trajectories within the stablecoin ecosystem. According to the study’s dataset, stablecoin market capitalization typically expanded by roughly 15% over a standard 10-week window. However, that growth rate experienced a noticeable contraction when banks adjusted their payout structures.

A mere one-basis-point increase in deposit rates—a surprisingly sizable weekly movement for traditionally slow-moving consumer savings yields—was found to trim that 15% growth rate down to approximately 12% under the authors’ baseline statistical estimates. When the researchers applied a secondary methodological approach specifically designed to isolate direct cause and effect from broader macroeconomic coincidence, the growth projection dropped even further, down to about 6%.

Crucially, the data did not show stablecoins shrinking in absolute terms when banks raised rates; rather, the digital assets continued to grow, but at a markedly slower pace. This distinction highlights that while higher savings yields can successfully temper the velocity of stablecoin adoption, they do not completely halt the momentum of the digital currency sector.

To separate genuine causation from mere statistical correlation, the authors capitalized on a well-documented structural quirk in commercial bank pricing behavior. Historically, traditional lenders are notably sticky when it comes to passing along rate hikes; they tend to barely raise consumer savings rates at all until the federal funds rate crosses a certain threshold—specifically around 3%. Once the benchmark rate clears that crucial psychological and structural benchmark, commercial banks typically begin repricing their deposit products much more rapidly. By leveraging this behavior as an instrumental variable, the researchers were able to establish a more definitive causal link between banking sector yields and cryptocurrency demand.

The empirical analysis also revealed notable differences among individual digital assets. The inhibitory link between higher bank savings rates and stablecoin expansion was found to be notably stronger for Circle’s USD Coin (USDC) than for Tether’s USDT. The study’s authors attribute this divergence primarily to USDC’s closer operational ties, regulatory alignment, and heavier utilization among domestic U.S. users, who are arguably more directly sensitive to domestic banking yields and traditional financial alternatives.

Ultimately, the working paper concludes that traditional financial institutions "retain some influence over the pace of that adoption through deposit pricing," proving that traditional monetary policy transmission mechanisms still hold sway over retail liquidity preferences.

Regulatory Debates and Broader Context

Naturally, these findings come with important caveats. Working papers of this nature reflect solely the views and academic analyses of their authors rather than an official policy stance or consensus of the Bank for International Settlements itself. Furthermore, the dataset examined by Aldasoro and Ahmed spans a unique economic period defined by a single, aggressive high-interest-rate cycle—a timeframe during which most major stablecoins offered zero direct yield to ordinary holders.

Looking ahead, the authors emphasized that financial regulators must carefully weigh emerging policy questions, particularly regarding whether stablecoin issuers should be permitted to pass along investment yields directly to token holders. Regulators must also balance these considerations against the complex trade-offs of mandating that issuers maintain a substantial portion of their underlying reserves directly in commercial bank deposits, a requirement that deeply intertwines the crypto ecosystem with the traditional banking plumbing.

This policy debate is far from theoretical and remains intensely active in Washington, D.C. Traditional banking lobbies have actively fought to keep stablecoin yield off the table, arguing that allowing digital tokens to pay interest could spark a massive structural flight of capital away from traditional lenders and into crypto-native instruments. This high-stakes lobbying battle loomed large over legislative efforts, including the closely watched Clarity Act, which faced a stalled vote in the Senate.

Meanwhile, federal regulatory agencies including the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the U.S. Department of Treasury have been actively drafting and refining rules to implement the GENIUS Act. The landmark legislation, signed into law by President Donald Trump in July of last year, effectively established a formal federal legal framework for stablecoins in the United States, outlining clear rules of the road for their issuance, everyday use, and secure custody.

For the Bank for International Settlements, examining stablecoins and their systemic implications is part of a long-running research agenda. As early as 2021, the Basel-based institution argued that the rapid ascent of blockchain-based digital dollars made the development of official central bank digital currencies (CBDCs) an increasingly urgent priority for global monetary authorities. Additionally, a comprehensive BIS survey published in 2023 warned that if privately issued stablecoins achieved widespread mainstream adoption, they could pose distinct systemic threats to international financial stability.