IDEAS home Printed from https://ideas.repec.org/p/bis/biswps/1382.html

Are stablecoins and bank deposits substitutes?

Author

Listed:
  • Iñaki Aldasoro
  • Rashad Ahmed

Abstract

We test whether stablecoins and bank deposits act as substitutes by estimating the semi-elasticity of stablecoin market capitalization with respect to deposit rate changes. Using local projections fit to weekly U.S. data from January 2019 to June 2025, we find that deposit rate increases predict slower stablecoin growth. To address endogeneity, we exploit a nonlinearity in deposit rate pass-through. Whereas other money market rates track the federal funds rate roughly linearly, banks reprice deposits more aggressively once it exceeds approximately 3%. Against average ten-week stablecoin growth of 15%, ordinary least squares estimates imply a reduction of roughly 3 percentage points per basis point of deposit repricing, or about 2.4 percentage points per one-standard-deviation move. Instrumental variable estimates are roughly three times larger and pass a placebo test using non-stablecoin cryptocurrencies. Effects are stronger for USDC than for USDT, consistent with the former’s closer ties to U.S. depositors. Cross-sectional variation in repricing across deposit tiers provides independent evidence of substitution. The size of the stablecoin sector therefore depends in part on how banks price deposits.

Suggested Citation

  • Iñaki Aldasoro & Rashad Ahmed, 2026. "Are stablecoins and bank deposits substitutes?," BIS Working Papers 1382, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1382
    as

    Download full text from publisher

    File URL: https://www.bis.org/publications/working-paper-1382-are-stablecoins-and-bank-deposits-substitutes.pdf
    File Function: Full PDF document
    Download Restriction: no
    File URL: https://www.bis.org/publications/working-paper-1382-are-stablecoins-and-bank-deposits-substitutes
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bis:biswps:1382. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin Fessler (email available below). General contact details of provider: https://edirc.repec.org/data/bisssch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.