PiCK
White House Economists Say Stablecoin Yield Would Have Limited Effect on Regional Banks
Summary
- The White House Council of Economic Advisers said the impact of stablecoin interest payments on regional banks would be limited.
- The council said a ban on stablecoin yield would do little to protect bank lending and would only force consumers to forgo returns.
- The ICBA said allowing stablecoin interest payments could lead to as much as $1.3 trillion in deposits and $850 billion in loans leaving banks.
Forecast Trend Report by Period
The White House Council of Economic Advisers said allowing stablecoins to pay yield would have a limited effect on regional banks.
Bloomberg reported on Aug. 8 that the council, in a report released that day, said bank lending would increase just 0.02% from current levels if stablecoins were allowed to offer yield. It added that most of the increase would likely flow to large banks rather than regional lenders.
The council said the premise that banning stablecoin yield would generate positive welfare effects is unrealistic. Such a ban would do little to protect bank lending and would instead leave consumers giving up the benefit of earning competitive returns on stablecoin holdings, it added.
The council’s analysis contrasts with a recent estimate from the Independent Community Bankers of America, or ICBA. The group said allowing stablecoins to pay yield could pull as much as $1.3 trillion in deposits and $850 billion in loans out of banks.
Meanwhile, the US crypto market structure bill known as the CLARITY Act remains stalled as banks and the crypto industry clash over stablecoin yield. Bloomberg said the measure has been delayed for months because of the dispute, with White House-led mediation talks taking place during that time.
JOON HYOUNG LEE
gilson@bloomingbit.ioCrypto Journalist based in Seoul
