White House analysis finds stablecoin yield bans increase bank lending by 0.02%

Bank lending would increase by 0.02% of total loans if stablecoin yield were banned. This $2.1 billion increase in lending is the result of an analysis by the Council of Economic Advisers regarding the GENIUS Act and the CLARITY Act. Policymakers intended the ban to prevent deposit outflows from banks. The mechanism for limited growth is the recycling of reserves. Stablecoin issuers allocate funds into short-term Treasuries, which then re-enter banks through dealer deposits. Roughly 88% of stablecoin reserves are allocated to Treasury bills and similar liquid assets. Only 12% of stablecoin reserves are held in bank deposits subject to full-reserve treatment. Banks further reduce the net lending effect by absorbing part of the additional capacity into liquidity buffers. The result is a net increase of 0.02% of total loans.