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business15h ago
NY Fed: Banks Holding Stablecoin Deposits Are Lending Less | PYMNTS.com
- The New York Fed finds stablecoins prompt banks to hold more reserves and lend less.
- Post-SVB period shows banks with stablecoin partners had higher reserve volatility and interbank payments.
- The study estimates about a 14 percentage point drop in loan-to-asset ratio for treated banks.
- Stablecoin activity increases intraday volatility in partner banks’ reserve balances.
- Stablecoins create liquidity shocks transmitted through the banking system.
- The study argues digital payments innovation flows through the traditional financial system.
- Some banks remain cautious as stablecoins scale and integration grows.
- Post-SVB period led to new partnerships between stablecoin issuers and banks.
- New York Fed links stablecoins to changes in bank balance sheets and credit creation.
- Policymakers are urged to consider liquidity dynamics as digital dollars enter mainstream use.
- The research sits alongside another NY Fed report on tokenized deposits and stablecoins.
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