The Federal Reserve Board published a speech by Governor Stephen I. Miran arguing that rapid growth in USD-denominated stablecoins could create a “global stablecoin glut” that meaningfully affects monetary policy. He said expanding stablecoin use, particularly outside the United States, is likely to increase demand for U.S. Treasury bills and other liquid USD assets and could put sustained downward pressure on the neutral policy rate (r*). Miran highlighted the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) as creating a U.S. regulatory pathway that requires U.S.-domiciled issuers to hold one-to-one reserves in safe and liquid USD assets, including bank deposits, short-term Treasurys, overnight repos or reverse repos backed by U.S. Treasurys, and government money market funds. Federal Reserve staff-compiled private-sector projections put stablecoin uptake at roughly USD 1 trillion to USD 3 trillion by the end of the decade, compared with just over USD 3 trillion in additional Treasury holdings during the most recent round of quantitative easing and under USD 7 trillion of Treasury bills outstanding. He also cited research suggesting widespread, fully securities-backed stablecoins could lower interest rates by as much as 40 basis points, and sketched scenarios in which USD 2 trillion of additional foreign demand for dollar assets could widen the U.S. current account deficit by about 1.2 percentage points of GDP by the end of the decade. The remarks flagged open questions for policymakers, including whether stablecoin funding substitutes for bank deposits and alters monetary policy transmission, how run risk could propagate, and whether higher global dollar usage could strengthen the dollar, increase the likelihood of the zero lower bound binding, and amplify international spillovers from Federal Reserve policy.

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