A working paper from the Bank for International Settlements finds that the gap between what banks pay depositors and what stablecoins offer is the clearest driver of money moving into tokens, meaning banks that lift deposit rates can hold that money in place.
Published as BIS Working Paper 1382, the study (the paper itself) examines whether stablecoins and bank deposits behave as substitutes, and concludes that the relationship hinges on interest rates: when rates paid on deposits are low, flows into stablecoins rise; when deposit rates climb, those flows ease.
Rates, not regulation, at the centre
For FX and macro traders, the framing matters because it puts deposit pricing, not rulemaking, at the centre of the stablecoin question. The paper suggests competition on yield, rather than bans or capital rules, is the lever banks control directly. A Federal Reserve staff note makes the same point about plumbing: money placed in stablecoins flows back to banks as deposits held by the issuers, so the composition of bank funding shifts even where the total does not.
The BIS authors are explicit about the limits of what they can claim: the work does not establish losses of deposits or lending, and its sample covers a single high-rate episode, so the findings describe one rate cycle rather than a law of the market.
The deposit-outflow warning on record
The scale of the potential substitution has been flagged before. Brian Moynihan, Bank of America’s chief executive, said in January that as much as $6 trillion of deposits could migrate into stablecoins and related products that offer returns.
Against that warning, the paper’s message is that the outcome is not fixed. If deposit rates track the yield available on tokenised cash products, the incentive to switch shrinks. If banks hold rates down while stablecoin issuers pass on money-market yields, the gap does the marketing for them.
What to watch
The next datapoint for this trade is the deposit-rate response: how quickly banks in major markets reprice savings products as policy rates shift, and whether stablecoin issuer yields widen or narrow the gap. The paper covers one high-rate window; a lower-rate cycle would test its central claim from the other direction.
