The BIS Finds Banks Can Slow Stablecoins by Paying Savers One Basis Point More

A working paper from the Bank for International Settlements, the institution owned by central banks that serves as their research and coordination body, finds that stablecoin growth is sensitive to what ordinary bank deposits pay. CoinDesk reported the finding: a rise of one basis point, that is one hundredth of a percentage point, in US bank deposit rates predicted a slowdown in stablecoin growth over the following ten weeks, from 15 percent to 12 percent.

The mechanism is straightforward once stated. A dollar stablecoin pays its holder nothing. The issuer takes the yield on the reserves. A bank deposit pays the saver something, and when that something rises, the opportunity cost of holding a non-yielding dollar token rises with it. At the margin, money moves.

Why one basis point is the striking part

A three percentage point swing in a ten-week growth rate from a single basis point of deposit rate movement implies a very elastic relationship. US bank deposit rates have historically lagged policy rates by a wide margin, which is precisely why stablecoins and money market funds have pulled deposits away from banks in the first place. The paper's result suggests banks have a lever they have mostly declined to pull.

It also recasts a policy argument. Much of the regulatory discussion about stablecoins has been framed around whether they should be allowed to pay interest, with banks lobbying against it on the grounds that it would drain deposits. The BIS finding runs in the other direction: banks can defend deposits by competing on price, and the price required appears to be small.

What it does not say

A working paper is research, not an official position of the BIS, and a predictive relationship found in historical data is not a mechanism anyone can switch on. Deposit rates are set by thousands of institutions responding to funding needs, competition and balance sheet constraints, not by a single dial.

The finding matters for this beat because stablecoin supply is the base layer under tokenised asset trading. On Robinhood Chain, stablecoin supply stands at $1.06bn against total value locked of $1.05bn, according to DefiLlama. On Ink, stablecoins account for $163.0m of $204.0m of deposits. On both chains the dollar token is not an accessory to the market, it is the collateral the market is denominated in.

If the paper's relationship holds, the growth rate of that collateral base is partly a function of what American banks decide to pay their savers, which is a dependency most onchain markets do not price and cannot observe directly. Deposit rate data is published weekly by US regulators, so the test is available to anyone who wants to run it forward.