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Banks in the Age of Stablecoins: Lessons from Their Historical Responses to Financial Innovations

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Abstract

The expansion of stablecoins has moved digital payment tokens from the periphery of financial markets to the center of policy discussions. With a global market capitalization in the mid-hundreds of billions of dollars and annual settlement volumes in the trillions as of 2025, stablecoins are increasingly viewed not merely as crypto‐market infrastructure but as potential competitors to traditional transaction accounts, particularly in payment processing, settlement functionality, and as short-term stores of value for transaction balances.

Suggested Citation

  • Samuel J. Hempel & JP Perez-Sangimino & Jessie Jiaxu Wang, 2026. "Banks in the Age of Stablecoins: Lessons from Their Historical Responses to Financial Innovations," FEDS Notes 2026-05-01-1, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfn:103193
    DOI: 10.17016/2380-7172.4017
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