US EditionFed's Miran: Stablecoin Adoption Could Put Downward Pressure on Interest Rates
Stablecoins could reduce the neutral interest rate by 0.4 percentage points, prompting the Fed to cut policy rates to sustain economic growth, Fed Governor Miran said.
- On Friday, Federal Reserve Governor Stephen Miran said surging demand for dollar-denominated stablecoins could push U.S. interest rates lower in a New York speech as an appointee of President Donald Trump.
- By boosting holdings of dollar assets, dollar-denominated stablecoins increase foreign demand for U.S. Treasury bills and other dollar assets, potentially lowering R-star, the neutral rate.
- Miran pointed to Fed staff projections of $1 trillion to $3 trillion in stablecoin uptake by the decade's end, citing research suggesting it could lower the neutral rate by 0.4 percentage point.
- Miran argued that if R-star is lower, ``policy rates should also be lower than they would otherwise be to support a healthy economy``, warning failure to cut rates would be contractionary.
- Miran, the Fed newcomer, has said during his short tenure ending in January that stablecoins could structurally lower borrowing costs and that the GENIUS Act will regulate issuers tightly.
14 Articles
14 Articles
Fed's Miran: Stablecoin adoption could put downward pressure on interest rates
NEW YORK :Federal Reserve Governor Stephen Miran on Friday said that if stablecoins end up enjoying widespread adoption it could mean the central bank needs to keep short-term interest rates lower than they would otherwise be.“Even relatively conservative estimates of stablecoin growth imply an increase in
Lots of stablecoin usage would likely lower the neutral rate
Federal Reserve Guv Stephen Miran discussed stablecoins and financial policy at the Blockchain & & Equity Capital Top in New York City on Friday. He stated that a great deal of stablecoin use would likely reduce the neutral rate, which Prevalent stablecoin use might rise the dollar’s worth. Secret Takeaways Prevalent stablecoin use might increase threat of striking no lower bound. Great deals of stablecoin use would likely reduce the neutral r…
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