The findings add evidence to a debate that has drawn warnings from bank executives. Bank of America CEO Brian Moynihan warned in January that as much as $6 trillion in deposits could move into stablecoins and related products offering returns, potentially reducing lending capacity and raising borrowing costs.
The effect is partly based on where issuers put their reserves. A December Federal Reserve staff analysis explained that money placed in stablecoins can return to banks as issuer deposits, changing who supplies banks’ funding even when total deposits remain unchanged.
Larger, uninsured balances could require banks to keep more liquid assets and leave less room for long-term loans that financial institutions issue.
Paying more to retain customers also raises banks’ funding costs. The Fed analysis suggested banks could target better rates at customers most likely to switch, while keeping lower rates for less mobile depositors.
The BIS paper does not establish losses of bank deposits or lending. Its sample covers one high-rate episode, and the findings may change as yield-bearing stablecoins and tokenized money market funds gain ground.
Banks “retain some influence over the pace of that adoption through deposit pricing,” the authors wrote.
