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Stablecoins can raise bank lending costs even without draining deposits

A typical buy-and-issue flow can leave total dollars in banks looking unchanged, while shifting deposit ownership to stablecoin reserve managers with potentially stronger creditor rights.

Reported · Written up by our desk · Market Structure

CryptoSlate describes a hypothetical stablecoin purchase in which a customer uses $100 to buy newly issued stablecoins, while the issuer takes the customer’s dollars into its own bank account and provides a transferable stablecoin balance on a blockchain.

In that setup, the dollars may still remain within the banking system, but CryptoSlate says banks can face a different credit relationship because the deposit’s owner effectively changes from the customer to the stablecoin reserves manager.

The outlet argues that this is why stablecoin concerns can persist even when basic deposit totals do not fall, since banks can view deposits differently depending on the creditor and how withdrawals are managed for multiple users.

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