A recent White House study challenges the banking sector's claims that stablecoin yields would lead to a decline in deposits and lending to households and small businesses. Instead, the analysis reveals that banning stablecoin rewards would have a negligible impact on credit creation. The report, based on a stylized economic model using Federal Reserve and FDIC data, suggests that proposed restrictions on 'yield-like' rewards from intermediaries could be counterproductive.
It emphasizes that prohibiting yield would do little to protect bank lending while depriving consumers of competitive returns on stablecoin holdings. The findings could undermine a key argument from banking groups, which claim that a full ban on stablecoin yield would increase lending only marginally. The report also addresses concerns that community banks might be harmed, finding the impact on smaller lenders to be limited.
It estimates that community banks would account for just 24% of any incremental lending under a yield ban, approximately $500 million. The study concludes that the policy would deliver minimal benefits to the institutions it aims to protect, while generating a net welfare cost for consumers who would give up yield without receiving meaningful improvements in credit availability.