BIS: Higher Savings Rates Could Slow Stablecoin Growth
A BIS working paper finds that higher deposit rates could especially cool demand for stablecoins like USDC. The study links that to competition between banks, Tether, and Circle.
Key Takeaways
- The BIS concludes that higher savings rates can slow stablecoin growth.
- A 1 basis point increase in the average bank deposit rate was associated with lower expected stablecoin growth.
- The relationship was stronger for USDC than for USDT, which the researchers say fits American users.
Banks can slow the growth of stablecoins by paying savers more interest, according to a working paper from the Bank for International Settlements (BIS). According to the researchers, expected growth in stablecoin market cap over a 10-week period fell from about 15% to about 12% after a small increase in the average bank deposit rate.
What the BIS Studied
The study by Rashad Ahmed and Iñaki Aldasoro looked at weekly data from January 2019 through June 2025. The researchers also accounted for Bitcoin, Treasury yields, and broader financial conditions. Their main point is that even a 1 basis point increase, or 0.01 percentage point, was already associated with slower stablecoin growth.
Under their preferred estimate, which adjusts for banks changing their rates because stablecoins are growing, the effect was larger. In that case, stablecoin growth over 10 weeks would have fallen to about 6%. The authors do question that result, though, because that method is less robust. In both cases, growth stayed positive, so the paper shows that higher bank rates can slow the advance, but not directly reverse it.
USDC Reacts More Strongly
The relationship was stronger for Circle's USDC than for Tether's USDT. According to the authors, that fits the fact that USDC is more closely tied to American users. For European readers, that matters because stablecoins are increasingly seen as an alternative to traditional bank deposits, especially now that yield-bearing stablecoins and higher savings rates are competing more directly. Circle's broader USDC rollout also shows how the issuer is aiming for growth beyond its core market.
Why This Matters for Banks
The broader debate goes beyond stablecoin growth alone. A higher return on bank deposits can limit deposit substitution, while stablecoin adoption may push banks to rely more on wholesale funding. That can affect their funding costs and lending, and it may make the way rate changes flow through the banking system less predictable.
