The post American Bankers Association warns yield‑bearing stablecoins could sap community lending appeared on BitcoinEthereumNews.com.

Summary The American Bankers Association says yield‑bearing payment stablecoins could accelerate deposit flight from community banks once the market scales to $1–2 trillion. ABA modeling suggests potential loan reductions of $4.4–$8.7 billion in Iowa alone if stablecoins pull $5.3–$10.6 billion of deposits from local banks. The group’s critique directly challenges a White House report that finds banning stablecoin yield would add just $2.1 billion, or 0.02%, to U.S. bank lending. The American Bankers Association is escalating its campaign against interest‑bearing payment stablecoins, arguing they could drain deposits from community banks and cut local lending by billions of dollars even if a White House study downplays the risk. In an article for the ABA Banking Journal, the association’s chief economist writes that “the live policy concern is not whether prohibiting yield on payment stablecoins would impact bank lending,” but “whether allowing yield on payment stablecoins would encourage deposit flight — especially from community banks — thus raising banks’ funding costs and reducing local lending.” The ABA’s critique targets a recent report from the White House Council of Economic Advisers, which modeled the effects of banning yield on payment stablecoins and found that eliminating interest would increase total U.S. bank loans by only $2.1 billion, or 0.02%, at the cost of about $800 million a year in lost consumer welfare. “Policymakers should not take comfort from a study showing that prohibiting stablecoin yield might have a small, near-term effect on aggregate lending,” the ABA article says, calling that “not the contested scenario.” In its own work, the association asks what happens if yield‑bearing payment stablecoins reach 5–10% of U.S. bank deposits and become genuine competitors to insured savings. A one‑pager on “Implications for Community Banks in Iowa” estimates that if $5.3–$10.6 billion of deposits move from Iowa banks into payment stablecoins, lending…

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Filed under: News - @ April 13, 2026 3:31 pm