The Bank for International Settlements has published a working paper analysing how flows into and out of USD-backed stablecoins affect US Treasury yields, using daily data from January 2021 to March 2025. The paper estimates that stablecoin inflows compress 3-month Treasury bill yields by around 2 to 2.5 basis points within 10 days, with limited evidence of spillovers to longer maturities. Using instrumented local projection regressions, the authors find that a USD 3.5 billion five-day inflow (around two standard deviations) lowers 3-month yields by about 2 to 2.5 basis points, while outflows raise yields by two to three times as much. Decomposition by issuer attributes roughly 70% of the estimated yield effect to USDT (Tether) and about 19% to USDC (Circle), broadly consistent with their relative size and disclosed reserve composition. The paper highlights implications for monetary policy transmission, stablecoin reserve transparency, and financial stability risks associated with potential run-driven fire sales.
Bank for International Settlements 2025-05-01
Bank for International Settlements research links dollar stablecoin flows to short-term US Treasury bill yield moves
The Bank for International Settlements published a working paper analyzing the impact of USD-backed stablecoin flows on US Treasury yields, finding that inflows compress 3-month Treasury bill yields by 2 to 2.5 basis points within 10 days. The study attributes approximately 70% of the yield effect to Tether (USDT) and 19% to Circle (USDC), highlighting implications for monetary policy transmission and financial stability risks.