The Federal Reserve Board warns that stablecoins may pose risks to bank deposits and credit capabilities

The minutes of the April 10th meeting recently revealed that members of the Federal Reserve's Community Deposit taking Advisory Committee (CDIAC) expressed concerns about stablecoins issued by non bank institutions. The committee believes that such stablecoins may accelerate the outflow of bank deposits and weaken the ability of community banks to provide loans to small and medium-sized enterprises and households. The committee compares stablecoins to the impact of money market funds on the banking industry at the end of the 20th century, pointing out that they are similar to central bank digital currencies (CBDCs) in that they may divert the deposit base of the banking system. It particularly emphasizes that the current stablecoins are not subject to equal liquidity regulatory requirements, which may lead to banks reducing their credit scale, especially affecting small borrowers who rely on local bank services. The committee suggests incorporating stablecoins into the financial stability regulatory framework, requiring the implementation of unified standards for banks and non bank issuers to prevent regulatory arbitrage. This position echoes the statement made by Federal Reserve Chairman Powell on April 16th, acknowledging the broad appeal of stablecoins but emphasizing the need to establish an appropriate regulatory system.