Rising global demand for U.S. dollar–pegged stablecoins could contribute to lowering interest rates, according to U.S. Federal Reserve Governor Stephen Miran. Speaking at the BCVC summit in New York on Friday, Miran suggested that stablecoins might be “putting downward pressure” on the neutral interest rate — or r-star — which represents the level that neither stimulates nor slows the economy.

He explained that if the neutral rate were to fall, the Federal Reserve could eventually respond by adjusting its own policy rate downward.

The combined market capitalization of all stablecoins currently stands at roughly $310.7 billion, according to CoinGecko. Miran cited Fed research indicating that the market could expand to as much as $3 trillion within five years.

“My thesis is that stablecoins are already increasing demand for US Treasury bills and other dollar-denominated liquid assets by purchasers outside the United States and that this demand will continue growing,” he said. “Stablecoins may become a multitrillion-dollar elephant in the room for central bankers.”

Potential competition for traditional finance

International bodies, including the International Monetary Fund, have previously cautioned that stablecoins could pose a challenge to the traditional financial system by competing directly with established financial products and services. U.S. banking associations have also urged Congress to strengthen oversight of yield-bearing stablecoins, warning that such products could divert customers away from banks.

Regulation as a catalyst for adoption

During his address, Miran highlighted the importance of the GENIUS Act, describing it as a critical step toward establishing consumer protection and transparency in the stablecoin sector. “While I tend to view new regulations skeptically, I’m greatly encouraged by the GENIUS Act,” he said. “This regulatory apparatus for stablecoins establishes a level of legitimacy and accountability congruent with holding traditional dollar assets.”

He added that, from a monetary policy perspective, “the most important aspect of the GENIUS Act is that it requires U.S.-domiciled issuers to maintain reserves backed on at least a one-to-one basis in safe and liquid US dollar–denominated assets.”

Sources:

https://www.idnfinancials.com/jp/news/57988/imf-warns-stablecoin-runs-could-spill-into-traditional-assets

https://cointelegraph.com/news/stablecoin-demand-growing-push-down-interest-rates-fed-miran

https://www.federalreserve.gov/newsevents/speech/miran20251107a.htm

https://www.youtube.com/watch?v=MwinwzLHPPY