Stablecoin Growth Could Influence U.S. Interest Rates, Says Fed Governor

The growing global demand for U.S. dollar-backed stablecoins could play an unexpected role in influencing interest rates, according to Federal Reserve Governor Stephen Miran. Speaking at the BCVC Summit in New York on Friday, Miran suggested that the rapid adoption of stablecoins might already be exerting downward pressure on the so-called neutral interest rate. This is the rate that neither accelerates nor slows the economy.

Miran, who was appointed by President Donald Trump, explained that if stablecoins continue to expand, they could effectively push the Federal Reserve to lower its benchmark interest rates in response. The reasoning, he said, lies in how stablecoins increase demand for U.S. Treasury bills and other dollar-based assets, particularly among investors outside the United States.

Stablecoins Becoming a Major Market Force

According to data from CoinGecko, the total market capitalization of all stablecoins currently stands at around $310.7 billion. However, Miran referenced Federal Reserve research projecting that this figure could soar to as much as $3 trillion within the next five years. He emphasized that the continued global appetite for stablecoins could transform them into a significant force in financial markets, one that central banks can no longer ignore.

Miran pointed out that stablecoins have already begun reshaping liquidity patterns in global finance by creating new avenues for foreign investors to access dollar-denominated assets. As more individuals and institutions hold these digital tokens, the demand for U.S. government debt rises, influencing yields and, by extension, interest rates.

International organizations, including the International Monetary Fund (IMF), have previously cautioned that stablecoins could challenge traditional banking systems by competing directly for deposits and financial services. Several U.S. banking associations have urged Congress to impose stricter oversight, warning that yield stablecoins could lure away potential bank customers.

Regulatory Clarity Seen as Key to Adoption

During his address, Miran expressed optimism about recent regulatory efforts to bring more structure to the stablecoin market. He highlighted the GENIUS Act as a positive step, noting that it introduces clear operational standards and consumer protections for issuers.

He said the act helps ensure that U.S.-based stablecoin providers maintain full reserves in safe, dollar-denominated assets. This also creates a level of transparency and accountability similar to traditional banking. 

Miran concluded that stablecoins could soon become a major influence on global finance, acting as a bridge between digital innovation and traditional monetary systems.