"The analysis shows that stablecoin reserves largely circulate back into the banking system rather than exiting it, preserving credit channels. When users convert deposits into stablecoins, issuers typically allocate funds into short-term Treasuries, which then re-enter banks through dealer deposits."
"The study finds that banning stablecoin yield results in only a 0.02% increase in lending, indicating limited real-world impact. This suggests that the core policy assumptions behind proposed legislation may need reevaluation."
"The Council of Economic Advisers finds that the welfare gains from the yield ban require implausible assumptions to turn positive, challenging the legislative intent behind the GENIUS Act and the proposed CLARITY Act."
A White House economic report indicates that banning stablecoin yields results in only a 0.02% increase in lending, suggesting limited real-world effects. The analysis shows that only about 12% of reserves could be affected under full-reserve treatment, further limiting potential lending impacts. The Council of Economic Advisers argues that the welfare gains from the yield ban rely on unrealistic assumptions. The report challenges the concerns regarding deposit outflows from banks, demonstrating that stablecoin reserves largely remain within the banking system.
Read at news.bitcoin.com
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