Finance

Higher bank deposit rates predict slower stablecoin growth

The Tip Desk · November 3, 2026 · 2 min read

BIS research links higher deposit rates to slower stablecoin growth and bank liquidity requirements to greater private credit expansion in exposed US counties.

Higher deposit rates predict slower stablecoin growth in the BIS paper *Are stablecoins and bank deposits substitutes?*, connecting the expansion of alternative money to what banks pay savers. Private credit grows significantly more in US counties with greater exposure to banks subject to liquidity requirements in *Bank liquidity regulation and the growth of private credit*. Banks’ deposit pricing and lending constraints help explain the growth of financial services outside the banking sector.

The stablecoin estimates give that connection economic weight. Using weekly US data, the authors of *Are stablecoins and bank deposits substitutes?* estimate that a one-standard-deviation move in deposit repricing is associated with roughly a 2.4 percentage point reduction in ten-week stablecoin growth, against average growth of 15% over that horizon. To address whether other forces explain the relationship, they exploit banks’ tendency to reprice deposits more aggressively once the federal funds rate crosses a threshold. Their instrumental-variable estimates produce larger effects and pass a placebo test using cryptocurrencies other than stablecoins.

Using weekly US data from January 2019 to June 2025, the authors of the BIS paper *Are stablecoins and bank deposits substitutes?* estimate stronger effects of deposit repricing for USDC than for USDT, a difference they interpret as consistent with USDC’s closer ties to US depositors. The authors interpret cross-sectional variation in repricing across deposit tiers as independent evidence that deposits and stablecoins substitute for one another. From the relationship estimated in their US sample, the authors conclude that the stablecoin sector’s size depends in part on how banks price deposits.

Bank liquidity requirements have a corresponding connection to private credit. In *Bank liquidity regulation and the growth of private credit*, expansion following the introduction of the liquidity coverage ratio is greater in counties where banks subject to the rule have a larger footprint. It is also greater where those banks began with larger liquidity shortfalls. The authors describe their estimated effect of the liquidity coverage ratio on private credit growth as comparable in economic magnitude to that of increased capital requirements associated with the 2012 CCAR stress tests. The relationship between banks’ regulatory exposure and private credit growth is stronger in industries that rely more heavily on credit, supporting the authors’ interpretation that changes in bank loan supply contribute to the expansion.

Alternative providers also compete through the cost of moving money. In *Competing rails for crossborder payments: banks, fintechs, and stablecoins*, the authors compare harmonized all-in transfer costs across traditional banks, fintech money transfer operators, and stablecoin-based transfers for different corridors and payment sizes. They find that fintech operators have significantly compressed cross-border payment costs. Stablecoin transfers retain unresolved frictions. Across these studies, financial alternatives remain connected to bank pricing and regulation; in cross-border payments, fintech operators have delivered measurable cost reductions.