Will Stablecoins Consume Trillions in Bank Deposits?

Studying the rollout of money market funds in the 1970s to assess the impact of stablecoins on bank deposits today.

How big of a threat to bank deposits are stablecoins?

Treasury Secretary Scott Bessent tweeted recently that stablecoins could absorb as much as $3.7 trillion worth of U.S. Treasuries. If half came from checking or savings accounts, that would equate to 10 percent or so of total U.S. deposits.

Bessent wasn’t trying to be precise with his estimate. Nevertheless, it remains a good question: How will stablecoins impact bank deposits?

To get us in the ballpark of an answer, let’s look back on a time when the banking industry faced a similar threat with the introduction of money market funds in the 1970s.

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