White House says stablecoin reward ban would lift bank lending by just 0.02%

The White House Council of Economic Advisers said banning stablecoin rewards, including interest and yield payments, would have only a limited effect on protecting bank lending while reducing income opportunities for stablecoin holders. According to the White House website, the base-case scenario showed bank lending rising by $2.1 billion, or 0.02%, while lending at small banks with less than $10 billion in assets would increase by $500 million, or 0.026%. Even under a scenario that maximized the banking sector’s concerns over deposit outflows, lending would rise by $531 billion, or 4.4%. The estimate assumed the stablecoin market grows to around six times its current size relative to deposits and that reserve assets are held entirely in cash that cannot be used for lending. The CEA also released a web tool that lets users change assumptions and review the results.