"The American Bankers Association contends that the Council of Economic Advisers framed the wrong question by focusing on the effects of a prohibition rather than the implications of allowing yield as the market expands."
"ABA chief economist Sayee Srinivasan and banking research VP Yikai Wang warned that yield-paying payment stablecoins could accelerate deposit migration out of insured accounts, particularly affecting community banks."
"Their analysis indicates a potential market of 1 to 2 trillion dollars in payment stablecoins, where competitive yields on tokens could directly rival local deposits, leading to significant contractions in bank lending."
The American Bankers Association criticizes the White House's stablecoin study for focusing on the effects of prohibiting yield rather than the risks of allowing it. The study suggests banning yield would minimally impact bank lending while consumers would lose significant returns. However, the ABA argues that as the market for yield-paying stablecoins grows, it could lead to substantial deposit migration from community banks, threatening their stability. They predict a future market of 1 to 2 trillion dollars in payment stablecoins, which could severely impact local deposits and bank lending.
Read at Bitcoin Magazine
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