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A surprising idea is circulating inside the Federal Reserve: U.S. dollar stablecoins may soon help lower interest rates in the American economy.
This view, recently highlighted by Fed Governor Stephen Miran, argues that large-scale global demand for stablecoins could push down the neutral rate of interest (r*) — the rate that keeps growth steady without inflation rising.
It sounds unusual, but the mechanism is actually simple once you trace the flow of money.
How Stablecoin Demand Turns Into Treasury Demand
Because of strict regulations like the GENIUS Act, U.S. stablecoin issuers must back every token with safe assets — mainly Treasury bills, repo agreements, and money market funds.
This creates a direct pipeline:
1. Someone in another country buys a U.S. dollar stablecoin.
2. The issuer mints new tokens to meet that demand.
3. The issuer must then buy the same amount of U.S. Treasurys to legally back those tokens.
The result is powerful: global demand for digital dollars automatically becomes demand for U.S. government debt.
And when demand for Treasurys rises, yields fall.
Lower yields = lower borrowing costs.
Lower borrowing costs = lower interest rates across the economy.
A Digital Version of the “Global Savings Glut”
The Fed’s neutral rate, r*, is extremely important. Too high, and the economy slows. Too low, and inflation rises. Miran argues that stablecoins could structurally push r* lower for years.
Why?
Because stablecoins continuously expand the pool of capital flowing into short-term U.S. debt. This is similar to the early 2000s “global savings glut,” when foreign capital kept U.S. interest rates suppressed. Stablecoins may create a modern, digital version of that same phenomenon.
Research suggests large-scale stablecoin adoption could push interest rates down by 30–40 basis points. With estimates of $1–$3 trillion in stablecoin reserves by the end of the decade, this is no small force — it could reshape how the Fed manages the entire monetary system.
A Strategic Advantage for the United States
If stablecoins help keep rates lower, the U.S. government and American companies get a major advantage: cheaper capital.
At a time when nations are competing to dominate AI, robotics, defense, energy, and manufacturing, cheaper financing becomes a strategic edge. Supporting well-regulated, dollar-backed stablecoins isn’t just good policy — it aligns with national power.
Expanding the Dollar’s Reach Worldwide
Stablecoins are also becoming the most efficient way to deliver access to U.S. dollars globally. For people in countries with weak currencies or poor banking systems, dollar stablecoins act as a lifeline.
This strengthens digital dollarization and expands the global influence of the U.S. financial system.
The Bigger Picture
Stablecoins are no longer only a crypto tool. They’re becoming a structural part of global macroeconomics — shaping Treasury demand, lowering borrowing costs, and extending U.S. economic influence.
If Miran’s thesis is correct, stablecoins could become one of America’s most quiet but powerful financial levers in the digital era.
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Disclaimer: Not financial advice. For educational purposes only.
