Higher Bank Deposit Rates May Restrain Stablecoin Growth, BIS Paper Says

Stablecoin growth may be sensitive to how much savers can earn on traditional bank deposits, according to a working paper from the Bank for International Settlements. The paper’s finding points to the role of interest rates in shaping demand for dollar-linked digital assets.

The analysis found that a one-basis-point increase in US bank deposit rates was associated with slower stablecoin growth. Over a ten-week period, the growth rate was estimated to fall from 15% to 12% following that increase.

Why deposit rates matter

Stablecoins and bank deposits serve different functions, but both can be part of how people hold dollar value. When banks offer higher returns to depositors, the relative appeal of keeping funds in a bank account may increase. The BIS paper suggests that even a very small change in deposit rates can coincide with a measurable difference in stablecoin expansion.

The finding does not indicate that bank deposit rates are the only factor affecting stablecoin demand. It instead identifies a relationship between traditional savings returns and the pace at which stablecoin use grows over the period examined.

A signal for digital-asset markets

For stablecoin issuers, crypto-market participants and banks, the paper highlights the importance of competition between financial products. Stablecoin growth is often discussed in terms of digital-asset adoption, but the BIS analysis places part of that discussion within the broader market for dollar-based savings and payments.

Because the research is presented as a working paper, its result should be read as an analytical finding rather than a definitive forecast. The reported relationship nevertheless offers a way to assess stablecoin demand alongside changes in the returns available through the banking system.

Source: Coindesk