Stablecoins Are Booming — And The Fed Thinks They Could Cut Rates

Federal Reserve Governor Stephen Miran said growing demand for dollar-pegged stablecoins could push down interest rates , putting a new factor on the Fed’s radar.

According to a speech he gave at the BCVC Summit on November 7, stablecoins that channel savings into dollar assets may raise the supply of loanable funds and lower the Neutral interest rate, or “R” star.

Stablecoin Growth And Scale

Based on reports compiled by Fed staff, private-sector estimates place stablecoin adoption between $1 trillion and $3 trillion by the end of the decade — a jump large enough to matter for markets and policy.

Miran compared the possible scale of stablecoin demand to the Fed’s own purchases during the COVID-era stimulus and noted that under $7 trillion in Treasury bills are outstanding today, ma