Fed Governor Warns ‘Global Stablecoin Glut’ Could Reshape Monetary Policy

 NEW YORK—Federal Reserve Governor Stephen Miran believes the rapid rise of stablecoins could become a major force shaping U.S. monetary policy.

Once seen as a niche digital tool for crypto traders, stablecoins have evolved into a global conduit for dollar-denominated transactions, enabling users worldwide to store value and move capital more efficiently. Their growing prominence, Miran noted during his speech at the BCVC Summit 2025 at the Harvard Club, reflects continued demand for dollars—and with the GENIUS Act now providing a clear regulatory framework for U.S.-issued stablecoins, the sector is poised for broader adoption across payment systems.

Stephen Miran

Stablecoins’ link to the U.S. dollar is reinforcing the currency’s global dominance while simultaneously creating new implications for monetary policy. Miran argued that stablecoins are already increasing demand for U.S. Treasury bills and other dollar-based assets, especially from investors outside the United States.

This trend, he said, could lower the government’s borrowing costs but also exert downward pressure on the neutral interest rate, a key policy benchmark that influences how the Fed balances growth and inflation. As the scale of stablecoin issuance grows, these flows could significantly affect the supply of loanable funds in the economy, changing the dynamics of how the Fed’s policy rates transmit through the financial system.

The GENIUS Act—short for Guiding and Establishing National Innovation for U.S. Stablecoins Act—requires domestic issuers to fully back stablecoins with one-to-one reserves in safe and liquid dollar assets, such as Treasurys, repos, or government money market funds. Miran suggested that this mandate could amplify demand for short-term U.S. securities, even as noncompliant stablecoins abroad are also likely to park reserves in low-risk dollar assets to maintain credibility.

Federal Reserve research projects global stablecoin circulation could reach $1 trillion to $3 trillion by 2030, levels that would rival the Fed’s own pandemic-era asset purchases.

For emerging and developing economies, Miran said, stablecoins may offer a new bridge to the global financial system, allowing individuals and businesses to bypass local capital controls and access the dollar economy. By enabling frictionless cross-border payments and digital dollar holdings, stablecoins could help those in financially repressive or inflation-prone jurisdictions preserve value and transact more easily.

However, he cautioned that this growing “global stablecoin glut” could mimic the early-2000s global savings glut, creating excess demand for U.S. assets and pushing interest rates lower, with broad implications for exchange rates, capital flows, and global financial stability.

For banks and financial institutions, Miran’s remarks underscore both opportunity and disruption. Stablecoins’ adoption may deepen liquidity in Treasury markets and expand the reach of dollar finance—but it also risks disintermediating traditional banks, particularly if deposits shift toward digital-dollar alternatives, he noted. Miran warned that stablecoins could alter how monetary policy is transmitted, especially if large volumes of money flow outside the regulated banking sector. He urged policymakers to study these effects now, before the “multitrillion-dollar elephant in the room” reshapes both the global financial system and the Fed’s ability to steer it.