Federal Reserve Board Member Stephen Miran made noteworthy remarks regarding the role of cryptocurrencies, and particularly stablecoins, within the global financial system.
Miran stated in his remarks on the “Making Money” program that stablecoins could create a new global wave of savings that could put downward pressure on US interest rates in the long term.
Referring to a speech he gave about stablecoins approximately a month ago, Miran compared these assets to the concept of “global savings abundance” defined by former FED Chairman Ben Bernanke 20-25 years ago. He recalled that during that period, Asian countries in particular channeled their large trade surpluses into US dollars and US Treasury bonds, a process that lowered interest rates in the US. According to Miran, stablecoins could operate through a similar mechanism.
A FED official stated that stablecoins, defined as “payment stablecoins” under current regulations and addressed within the GENIUS Act, do not offer interest or deposit insurance. Therefore, the advantage of stablecoins is limited for investors in countries with free capital movements, such as the US. However, in countries with capital controls or regions where access to banking services is difficult, stablecoins offer a much stronger alternative.
According to Miran, stablecoins provide individuals in these countries with access to low-volatility savings instruments denominated in US dollars. This could lead to stablecoin growth largely originating from outside the US. Miran notes that funds flowing into stablecoins globally will ultimately flow into dollar-based savings instruments backed by assets such as US Treasury bonds and bank reserves, potentially creating effects similar to past global savings booms.
Miran stated that, according to his estimates, this new savings wave originating from stablecoins could be about one-third the size of past global savings booms. He noted that if such a scenario were to occur, it could put “significant” downward pressure on US interest rates.
In the program, Miran also touched upon economic policies, stating that he believes supply-side incentives can support economic growth without creating inflation.
*This is not investment advice.