Stablecoins and the macroeconomy: Bank disintermediation versus fiscal space

Stablecoins compete with banks for households’ holdings of safe and liquid assets, while creating additional demand for government debt. Building on a novel quantitative macroeconomic model, this column discusses how widespread stablecoin adoption affects the macroeconomy. In the baseline scenario, large-scale adoption has small negative long-run output effects. However, the sign and size of the effect depend on fiscal parameters, the regulatory framework for stablecoin reserve holdings, and whether stablecoin demand and issuance originate domestically or abroad. Short-run output effects can be significantly positive as the fiscal space channel activates faster.

Stablecoins are cryptoassets designed to maintain a stable value against a reference asset, predominantly the US dollar. Their market capitalisation has grown significantly over recent years and is forecast to expand further. While a growing literature has analysed the implications of stablecoins for payment and monetary systems (e.g. Arner et al. 2020, Cecchetti et al. 2026), their broader macroeconomic implications have been less explored.

In a recent paper (Hofmann et al. 2026), we develop a novel quantitative macroeconomic model to study the macroeconomic effects of stablecoins. Calibrating the model to US data, we find that a contractionary bank lending channel dominates a fiscal space channel in the long run, but the net effect is quantitatively modest even for large-scale stablecoin adoption. The analysis further suggests that the effect depends critically on fiscal parameters, the regulatory framework governing stablecoin reserve asset composition such as the EU’s Markets in Crypto-Assets Regulation (MiCA) and the US GENIUS Act, and on the level of foreign stablecoin demand and supply.

Stablecoins affect the economy through two opposing channels

Stablecoins affect the economy through two opposing channels: a bank lending channel and a fiscal space channel (Figure 1). The bank lending channel arises because households value the safety and liquidity attributes of their assets. Traditionally, bank deposits and physical cash provide payment and liquidity services, allowing banks to pay interest below the return on similarly safe, but less liquid assets. Stablecoins offer an alternative source of these services. If households shift their liquid asset holdings towards stablecoins, they reduce their deposit holdings and require higher deposit rates. As a consequence, banks’ funding advantage shrinks, and they pass higher costs on to borrowers. Firms’ financing costs increase, resulting in lower borrowing, investment, and output.

Figure 1 Bank lending and fiscal space channels of stablecoin adoption

The fiscal space channel works through stablecoin issuers’ reserve asset holdings. In our baseline, issuers invest exclusively in Treasury debt with a maturity below one year, i.e. T-bills. Greater T-bill demand lowers their yields, in line with empirical evidence (Ahmed and Aldasoro 2025, Cerutti et al. 2026). The resulting lower debt-servicing costs allow the government to reduce distortionary taxes, boosting output.

Large-scale stablecoin adoption has small long-run output effects

We calibrate the model to annual US macro-financial data and consider stablecoin adoption of up to $3 trillion. As a baseline scenario, stablecoin issuers are privately owned, stablecoin demand is entirely domestic, and the reserve assets consist solely of Treasury bills. With $2 trillion in stablecoins, issuers’ additional demand for Treasury bills lowers yields by around 25 basis points, expanding fiscal space. At the same time, competition from stablecoins induces banks to raise deposit rates by around 4 basis points, raising funding costs and dampening credit supply. These opposing forces largely offset each other: long-run output is around 0.03% lower than in an economy without stablecoins, as the contractionary bank lending channel only slightly outweighs the expansionary fiscal space channel. That said, despite the small decline in output, household welfare rises because stablecoins provide additional payment and liquidity services.

Figure 2 The economic impact of stablecoin adoption

Note: Effects of different levels of stablecoin adoption on output, the T-bill yield, and the deposit spread for our baseline scenario of full Treasury bill reserve backing. Stablecoin market capitalisation is in trillions of USD. The chart shows the overall effect of stablecoin adoption (red), as well as the isolated effects of the bank lending channel (orange) and the fiscal space channel (blue).

The rather small aggregate effect, even when considering the channels in isolation, results from several adjustment margins that cushion the effect. Households fund stablecoin purchases partly by reducing cash holdings, limiting the increase in funding costs and the fall in deposits. Banks reduce their Treasury bill holdings, which are bought by stablecoin issuers, so that a decline in deposits does not transmit one-for-one to credit. Firms also shift towards equity financing, cushioning the effect of reduced credit. As a result of these adjustments, substantial balance-sheet changes result in only a modest change in output.

The direction of the aggregate output effects depends on fiscal parameters (Figure 3, left panel). Higher public debt yields more positive effects of stablecoin adoption, as it implies a strengthening of the fiscal space channel. The same holds true for a greater share of short-term Treasury bills in the fiscal funding mix. A lower convenience yield on Treasury bills weakens the fiscal space channel. By contrast, using the additional fiscal space to increase government spending rather than reduce distortionary taxes has little effect on the overall output response.

Figure 3 The role of fiscal parameters, regulatory framework and international use

Note: Long-run output effects under different scenarios assuming a stablecoin adoption of USD 2 trillion. The left panel shows the implications of variations in fiscal parameters, while the right panel displays the implications of alternative stablecoin regulatory frameworks and foreign demand or supply. The alternative reserve scenarios assume that 50% of reserves are held in bank deposits or unremunerated central bank reserves. The international scenarios assume a 50% share of foreign demand or foreign supply.

Regulatory framework and international use are key factors

The macroeconomic impact of stablecoins also depends critically on the regulatory framework shaping stablecoin issuers’ reserve asset composition as well as on the international dimension (Figure 3, right panel).

Requiring issuers to hold a substantial share of reserves in bank deposits redirects some funding back to banks. However, it does not restore their funding advantage. Households still substitute from deposits into stablecoins and therefore require higher deposit rates, irrespective of how issuers subsequently allocate their reserves. At the same time, banks end up holding more T-bills, because stablecoin issuers purchase fewer T-bills. As a result, the bank lending channel is unchanged, while the fiscal benefit from stronger demand for Treasury bills is weakened. Consequently, the long-run output effects are more negative in such a scenario.

Requiring issuers to hold a substantial share of unremunerated central bank reserves instead raises output. In our model, such a policy shifts part of the stablecoin issuers’ profits to the public sector, enabling an additional reduction of distortionary taxation. It is key whether the profits from issuing stablecoins accrue to the private or public sector. If instead the reserves were remunerated at the Treasury bill yield, the outcome would coincide with the baseline scenario.

If foreign users hold a large share of the stablecoin stock, domestic output rises substantially. While the additional demand for Treasury bills is unchanged, there is considerably less bank disintermediation. This strengthens the fiscal channel relative to the bank lending channel. Note that the result assumes that foreign stablecoin purchases bring additional demand for dollar assets, rather than replacing existing offshore dollar holdings.

If instead the stablecoins are held domestically but issued abroad and backed by foreign assets, domestic output falls considerably. Competition for deposits persists, while part of the demand for reserve assets benefits foreign governments. This case illustrates why the consequences for an economy using foreign stablecoins differ drastically from those for the issuing economy.

Short-term effects can deviate from the long-run effects

The short-term effects of stablecoin adoption can deviate significantly from the long-run effects discussed so far. In our model, the fiscal space channel activates faster as it operates through short-term government debt, while the bank lending channel operates through long-term firm debt which takes longer to adjust. As a result, in the baseline scenario of $2 trillion in stablecoin adoption, with full Treasury bill backing, the short-term macroeconomic effects are significantly positive. Output rises by around 0.3% at its peak and only gradually converges to a slightly negative level.

Policy implications

Our analysis suggests that even substantial stablecoin adoption results in rather modest long-run effects on output despite large balance-sheet adjustments, because changes in bank funding and public financing costs largely offset each other. At the same time, regulatory and policy design remains an important margin. Redirecting funding to banks through stablecoin reserve deposits does not restore the funding advantage of banks. Reserve requirements affect government financing costs and determine how the profits from stablecoin issuance are allocated between private and public sectors. Substantial international stablecoin demand turns the net effect positive even in the long run, while backing domestically held stablecoins with foreign assets turns the net effect even more negative.

Source : VOXeu