White House: Stablecoin yield ban would boost bank lending by just 0.02%

The White House just made the banking lobby’s worst argument look even worse. A new report from the Council of Economic Advisers concludes that banning yield payments on stablecoins would increase total US bank lending by a grand total of $2.1 billion, or about 0.02% of outstanding loans. The numbers behind the non-threat The CEA’s analysis, released on September 15, modeled what would happen if stablecoin holders were stripped of the ability to earn yield on their holdings. The theory, championed by groups like the Independent Community Bankers of America, goes something like this: stablecoins offering competitive returns are siphoning deposits away from traditional banks, which in turn reduces their capacity to lend to Main Street businesses and homebuyers. The report estimates that roughly $54.4 billion, about 18.1% of the approximately $300 billion stablecoin market, might shift into bank deposits if yield were prohibited. Most stablecoin reserves are already parked in Treasuries and similar safe assets, meaning those funds are already circulating within the broader financial system. The CEA found that the net effect on actual loan origination would be negligible. Community ban...