Stablecoin Disintermediation

Michael Lee and Donny Tou

No 1185, Staff Reports from Federal Reserve Bank of New York

Abstract: We propose a theory of stablecoin disintermediation, whereby stablecoins not only erode banks’ deposit franchises but also transmit liquidity stress to the banking system. Using transaction-level data linking on-chain transactions to wholesale interbank payments, we document the first evidence of liquidity-driven bank disintermediation. Stablecoins directly transmit liquidity shocks to the banking system: banks with stablecoin deposits experience substantial increases in payment demand and heightened liquidity exposure to daily stablecoin primary market activity. Consistent with theory, banks operate “narrowly” to support liquidity-hungry stablecoin deposits – requiring substantially larger bank reserve balances to mitigate potential shortfalls. Even as beneficiaries of stablecoin growth within the banking system, partner banks’ loan share of assets contracts relative to peers. Our results substantially broaden the scope for stablecoins to disintermediate banks, impact bank lending, and complicate monetary policy implementation.

Keywords: stablecoins; Bank disintermediation; payments; bank reserves (search for similar items in EconPapers)
JEL-codes: D47 E41 E42 E58 G10 G21 (search for similar items in EconPapers)
Pages: 46
Date: 2026-02-01
New Economics Papers: this item is included in nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:102830

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DOI: 10.59576/sr.1185

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