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Stablecoins and Monetary Policy Transmission

Author

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  • Altavilla, Carlo
  • Boucinha, Miguel
  • Burlon, Lorenzo
  • Adalid, Ramon
  • Fortes, Roberta
  • Maruhn, Franziska

Abstract

This paper studies the effects of stablecoin adoption bank intermediation and the transmission of monetary policy. Using evidence from the rapid expansion of stablecoins combined with confidential granular data on euro area banks and their individual borrowers, we document three main findings. First, stablecoin adoption induces a deposit-substitution mechanism, whereby funds shift from retail bank deposits to digital assets. This reallocation increases banks’ reliance on wholesale funding and can ultimately constrain their intermediation capacity. Second, we show that stablecoins affect the pass-through of policy rates to bank funding costs and lending conditions, potentially strengthening monetary transmission while making it less predictable. Third, we document a potential risk associated with the growing prevalence of foreign-currency-denominated stablecoins. We show that banks with greater exposure to foreign-currency wholesale funding exhibit a weaker loan-supply response to domestic monetary policy shocks, indicating a weakening of monetary policy transmission and a potential erosion of monetary sovereignty.

Suggested Citation

  • Altavilla, Carlo & Boucinha, Miguel & Burlon, Lorenzo & Adalid, Ramon & Fortes, Roberta & Maruhn, Franziska, 2026. "Stablecoins and Monetary Policy Transmission," CEPR Discussion Papers 21321, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21321
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    Cited by:

    1. Nicola Borri & Kirill Shakhnov, 2026. "Does Regulation Bite at Gateways? Evidence from MiCA and Stablecoins," Papers 2607.09514, arXiv.org.

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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