How Do Deposit Rates Affect Stablecoins? New Insights from BIS Research
A recent working paper from the Bank for International Settlements, titled 'Are Stablecoins Substitutes for Bank Deposits?', sheds new light on the interplay between digital assets and traditional finance. Analyzing US weekly data from January 2019 to June 2025, and after controlling for factors like Bitcoin price volatility, Treasury yields, and broader financial conditions, the researchers identified a pattern: increases in bank deposit rates were statistically associated with a deceleration in the growth rate of the stablecoin market.
Quantifying the Observed Effect
The baseline model estimates that a one-basis-point (0.01 percentage point) weekly increase in the average deposit rate could lead to a subsequent ten-week cumulative growth rate for stablecoin aggregate value that is about 3 percentage points lower than its average of approximately 15%, settling around 12%. It's crucial to note this relationship signifies a slowdown in growth momentum, not an outright contraction in market size.
A notable finding was the difference in sensitivity between major dollar-pegged stablecoins. The study indicated that USDC exhibited a stronger reaction to changes in deposit rates compared to USDT. This suggests potential variations in user bases, use cases, or risk profiles between different stablecoins, influencing how they respond to traditional financial policy signals.
Limitations and Implications of the Study
The authors carefully note that this finding cannot be interpreted as evidence that total bank deposits or lending have decreased. The observed correlation does not firmly establish causality, and the underlying mechanisms require further investigation. Furthermore, the sample period largely corresponds to one specific cycle of rising interest rates, leaving the generalizability of the conclusions to other macroeconomic environments an open question.
The significance of this research lies in its empirical linking of a traditional monetary policy tool (interest rates) to dynamics in the emerging crypto-asset market. As central banks increasingly consider the impact of digital assets on the financial system, studies like this provide a more evidence-based foundation for policymakers and market participants alike.