Low Bank Deposit Rates Could Make Stablecoins More Appealing

Some banks offer deposit rates of 0.1% to 0.4%, a level that could make stablecoins more appealing to people comparing where to hold funds.

Stablecoins are digital currencies designed to maintain a stable value, often through a peg to fiat currencies. Financial regulators are monitoring their effects on the banking sector as their use grows.

During a high-rate period from 2022 through 2025, stablecoins generally did not pay interest, while bank deposits could. An earlier analysis of deposit pricing and stablecoin growth associated deposit pricing with a 2.8-percentage-point decline in stablecoin growth over 10 weeks. The analysis measured overall growth, not individual depositors’ choices.