The White House Council of Economic Advisers (CEA) has published the first formal US government model of how stablecoin yield affects bank lending, concluding that banning interest payments would increase total bank loans by just $2.1 billion, or 0.02%.
The April 2026 paper directly challenges industry and academic estimates that put the lending impact in the trillions. It argues that fears about stablecoins draining bank deposits are vastly overstated. At baseline, the CEA finds a yield prohibition would carry a net welfare cost of $800 million and a cost benefit ratio of 6.6, meaning the consumer harm from lost yield far exceeds any benefit to bank lending. Even stacking every worst case assumption, including a sixfold increase in the stablecoin market’s share of deposits and the Federal Reserve abandoning its current monetary framework, the model produces only $531 billion in additional lending, or 4.4% of total bank loans.
The paper takes an unusual approach to a debate that has typically been framed around whether yield bearing stablecoins threaten bank deposits. Instead the CEA inverts the question, asking whether banning yield would increase deposits and lending. No prior analysis has adopted this framing, which implicitly treats yield bearing stablecoins as the status quo to be defended rather than a policy change to be evaluated.
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
