A senior U.S. Federal Reserve official has warned that the explosive growth of stablecoins, dollar-pegged digital tokens now processing trillions of dollars in payments, could reshape global finance and exert long-term downward pressure on U.S. interest rates.
In a speech titled “A Global Stablecoin Glut: Implications for Monetary Policy” delivered at the BCVC Summit 2025 in New York, Fed Governor Stephen I. Miran said the rising demand for stablecoins is likely to increase purchases of U.S. Treasury securities and other liquid dollar assets.
This, he argued, could mimic the effects of the early-2000s “global savings glut” that depressed rates worldwide.
“Stablecoins may become a multitrillion-dollar elephant in the room for central bankers,” Miran said. “Their growth increases the supply of loanable funds in the U.S. economy, placing downward pressure on the neutral interest rate.”
Trillions in Stablecoins Could Lower Neutral Interest Rate by 40 Basis Points
Miran’s comments come as the Federal Reserve maintains a target range of 3.75% to 4.00% for the federal funds rate, following two cuts this year.
The effective rate currently sits around 3.87%, marking a decline from 4.33% earlier in 2025.
The Fed governor’s analysis suggests that even without further rate cuts, the rapid adoption of stablecoins could naturally exert downward pressure on borrowing costs.
By attracting trillions in reserves into dollar-backed digital assets, much of it from outside the U.S., stablecoins effectively expand the pool of funds available for lending, similar to how global capital inflows once helped keep yields low in the 2000s.
According to Miran, the rise of stablecoins could lower the neutral interest rate, the level at which monetary policy is neither stimulating nor restricting the economy, by as much as 40 basis points if adoption projections materialize.
Under the new GENIUS Act, passed earlier this year, U.S. stablecoin issuers must hold reserves fully backed by safe, liquid dollar assets such as Treasury bills, repos, and government money market funds.
This mandate, Miran said, could substantially boost demand for U.S. debt.
The Fed estimates that the stablecoin market could grow to between $1 trillion and $3 trillion by 2030, rivaling the scale of quantitative easing programs from the COVID-19 era.
According to Andreessen Horowitz’s “State of Crypto 2025” report, stablecoins processed $46 trillion in transactions over the past year, a 106% increase from 2024, and now rival the U.S. Automated Clearing House (ACH) in payment volume.
Collectively, stablecoin reserves hold over $150 billion in U.S. Treasuries, making them the 17th largest holder of American debt, ahead of several sovereign nations.
Stablecoins Now Represent Over 1% of U.S. Dollars in Circulation, Reshaping Global Finance
Miran compared the rise of stablecoins to the early-2000s “global savings glut,” which saw an influx of foreign capital into U.S. debt markets, driving down yields.
The effect, he warned, could be similar: more savings chasing safe dollar assets, reducing the equilibrium or “neutral” interest rate.
Economists Marina Azzimonti and Vincenzo Quadrini previously estimated that widespread stablecoin adoption could push rates down by as much as 40 basis points.
If accurate, that shift could mean the Fed would need to keep policy rates lower than they otherwise would to maintain economic balance.
Miran cautioned that if the Fed failed to adjust to a lower rate, monetary policy could become “unintentionally contractionary.”
Once seen as a niche instrument for crypto trading, stablecoins have become one of the largest digital payment systems in the world.
Transfers settle in seconds, cost less than a cent, and are increasingly used for remittances, cross-border trade, and decentralized finance (DeFi) activity.
Data from A16z shows that more than 1% of all U.S. dollars in circulation now exist in tokenized form on public blockchains, a milestone that underscores how digital dollars are reshaping global finance.
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