BIS Working paper: Rising deposit rates are associated with slower stablecoin growth,USDC with a more sensitive response
BIBIBI
AT A GLANCE
BIS The working paper states that rising bank deposit rates are associated with slower stablecoin market-capitalization growth,USDC with a stronger response than that of USDT。
Article
【BIS Working paper: Banks raising deposit rates may slow stablecoin growth,USDC with a more pronounced response】
The Bank for International Settlements (BIS) published the working paper “Are Stablecoins and Bank Deposits Substitutes?” The study is based on U.S. weekly data from 2019 year January to 2025 year June, and finds, after controlling for Bitcoin prices, Treasury yields, financial-market conditions, and other factors, that rising bank deposit rates are associated with slower stablecoin market-capitalization growth. Under the baseline model, a one-week increase of 1 basis points (0.01 percentage points) in the average deposit rate corresponds to cumulative stablecoin market-capitalization growth over the following weeks being approximately 15%below its average level of about 3 percentage points, at approximately 12%, rather than market capitalization declining. The response of USDC is stronger than that of USDT. The authors note that the study does not establish that total bank deposits or lending decreased, and that the sample covers only one high-interest-rate cycle. The views expressed in the paper are those of the authors and do not necessarily represent the position of BIS or its member central banks.
Key points
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The Bank for International Settlements (BIS) published the working paper “Are Stablecoins and Bank Deposits Substitutes?”
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The study uses 2019 year January to 2025 year June U.S. weekly data.
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After controlling for Bitcoin prices, Treasury yields, financial-market conditions, and other factors, the study finds that rising bank deposit rates are associated with slower stablecoin market-capitalization growth.
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The baseline model estimates that a one-week increase in the average deposit rate of 1 basis points (0.01 percentage points) corresponds to cumulative stablecoin market-capitalization growth over the following weeks falling from an average level of approximately 15%by approximately 3 percentage points to around 12%.
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The estimate above indicates slower market-capitalization growth, not a decline in market capitalization.
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USDC has a stronger response than USDT。
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The authors note that the study does not establish that total bank deposits or lending decreased, and that the sample covers only one high-interest-rate cycle.
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The views expressed in the paper are those of the authors and do not necessarily represent the position of BIS or its member central banks.
AI-assisted interpretation
The following is analysis, separate from reported facts. Verify important claims independently.
The study observes that when bank deposit rates rise, stablecoin market capitalization may still grow, but growth may slow. The example in the paper is cumulative growth declining from approximately 15%to approximately 12%, not market capitalization declining.USDC had a more pronounced response in the sample than USDT.
Why it matters to readers
The material indicates that changes in bank deposit rates may be related to stablecoin market-capitalization growth; therefore, observing deposit rates and the subsequent market-capitalization growth of USDC、USDT may help clarify whether this historical correlation persists.
Beginners should distinguish between “slower growth” and “a decline in market capitalization”: a decline from 15%to 12%is still growth, and historical correlation should not be interpreted directly as a certain future outcome.
Risks and unknowns
The material does not provide a link to the original working paper, so the details of the model and robustness checks cannot be verified based solely on the available evidence.
The research result is a correlation between deposit rates and stablecoin market-capitalization growth; the material does not establish causality.
The sample covers only one high-interest-rate cycle, and it is not yet clear whether the conclusions apply to other periods.
The material does not provide the specific magnitudes of the responses of USDC and USDT respectively.
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The study does not establish that total bank deposits or lending decreased.
Related concepts
Stablecoin
An asset that seeks to track a reference value and is subject to risks including depegging, reserves, and redemption.
