Bank Deposit Yields Compete Directly With Non-Yielding Tokens

A working paper released by the Bank for International Settlements reveals that central banks and commercial lending institutions hold a direct economic lever over stablecoin growth. The report demonstrates that when traditional banks offer higher interest rates on standard savings accounts, capital expansion within the digital dollar ecosystem slows dramatically.

Published on October 13, 2026, as BIS Working Paper 1382, the study titled "Are stablecoins and bank deposits substitutes?" was authored by researchers Rashad Ahmed and Iñaki Aldasoro. Analyzing weekly United States financial data spanning from January 2019 to June 2025, the authors evaluated a period during which total stablecoin capitalization expanded from under $5 billion to over $220 billion.

Throughout this multi-year observation window, the baseline average growth for stablecoin market capitalization stood at roughly 15% over ten-week periods. However, using ordinary least squares estimates, the authors established that a single basis point increase in commercial bank deposit rates correlates with approximately 3 percentage points less market cap expansion over that same ten-week timeframe.

Institutional Assets Experience the Sharpest Impact on Stablecoin Growth

The empirical findings highlight clear differences in how individual digital assets respond to shifting yield environments. USDC experienced the sharpest deceleration, registering 4.8 percentage points less growth for every 1 basis point hike in bank deposit rates. In contrast, USDT demonstrated a milder sensitivity, slowing by 1.9 percentage points under identical rate increases.

Researchers attributed this divergence to USDC's closer integration with US institutional investors and domestic financial channels. Interestingly, the dampening relationship extended to tokens deployed across decentralized finance protocols, proving that on-chain lending platforms remain tied to macro rate dynamics. Conversely, crypto assets outside the stablecoin category showed no statistically significant sensitivity to bank rate movements.

Threshold Effects and Policy Implications

The research highlights a pronounced nonlinear mechanism that becomes active once the federal funds rate rises above approximately 3%. When benchmark interest rates linger near zero, non-yielding tokens and conventional bank deposits offer similar economic returns to holders. Once interest rates rise meaningfully, the opportunity cost of holding non-yielding stablecoins grows increasingly difficult for yield-seeking market participants to ignore.

For global regulators and monetary authorities, these empirical findings confirm that commercial bank deposit rates serve as a natural market-based mechanism affecting asset flows between legacy finance and digital token ecosystems.