Federal Reserve Governor Stephen I. Miran delivered a landmark speech at the BCVC Summit 2025 at the Harvard Club of New York City, warning that the explosive growth of stablecoins could soon have profound and lasting effects on U.S. monetary policy. Speaking on the theme “A Global Stablecoin Glut: Implications for Monetary Policy,” Miran described stablecoins as “a multitrillion-dollar elephant in the room for central bankers.”
Miran argued that stablecoins—digital tokens pegged to the U.S. dollar and backed by liquid assets such as Treasury bills—are now a “fast-growing part of the financial landscape,” offering users a frictionless way to hold and transfer dollar value worldwide. However, their growth could also reshape the global demand for dollar-denominated assets, lowering U.S. borrowing costs but simultaneously pushing down the neutral interest rate (r*)—the benchmark rate that keeps the economy operating at potential without stimulating or restricting growth.
“Stablecoins are increasing demand for U.S. Treasury bills and other dollar assets by purchasers outside the United States,” Miran said. “That demand will continue to grow, putting downward pressure on r* and complicating how we conduct monetary policy.”
Takeaway
Stablecoins, the GENIUS Act, and the Future of the Dollar
Central to Miran’s remarks was the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), enacted earlier this year. The legislation provides a clear regulatory framework requiring U.S.-based stablecoin issuers to maintain one-to-one reserves in safe and liquid dollar assets such as Treasury bills, repos, and government money market funds.
Miran called the act “a milestone for legitimacy and accountability,” noting that even non-compliant offshore stablecoins will likely hold similar reserves to maintain credibility. “Stablecoins may soon become a foundational layer of the dollar-based financial system,” he said. “By broadening access to U.S. assets, they reinforce the dollar’s global dominance.”
The Federal Reserve’s internal projections, he revealed, show that stablecoin issuance could reach between $1 trillion and $3 trillion by 2030—nearly equivalent to the size of the Fed’s Treasury purchases during the COVID-19 quantitative easing program. Such scale, Miran noted, would make stablecoins “too large for central banks to ignore.”
Takeaway
Monetary Policy at the Crossroads of a “Stablecoin Era”
Miran compared the coming “global stablecoin glut” to former Fed Chair Ben Bernanke’s “global saving glut” of the early 2000s, which drove long-term interest rates lower despite robust economic growth. He estimated that an additional $2 trillion in foreign stablecoin demand could expand the U.S. current account deficit by about 1.2 percentage points of GDP, representing roughly one-third the size of the original saving glut.
Such structural changes could have lasting effects on how the Fed sets policy rates. “Even conservative estimates of stablecoin growth imply a surge in global loanable funds that pushes down r*,” Miran said. “If policymakers fail to adjust, that would be contractionary.” He cautioned that lower r* values could increase the likelihood of hitting the zero lower bound (ZLB), limiting the Fed’s ability to provide stimulus during downturns while still allowing rates to rise when tightening policy.
Additionally, he warned that widespread dollar-denominated stablecoin adoption abroad could strengthen the U.S. dollar and reduce the shock-absorbing role of floating exchange rates. “Incremental dollarization may make global business cycles more synchronized,” he said. “That interdependence means the Fed’s policy decisions will reverberate more forcefully worldwide.”
Takeaway
Dollarization, Financial Access, and Systemic Risks
While acknowledging potential risks of disintermediation, Miran argued that the GENIUS Act’s restrictions—prohibiting yield payments and limiting eligible reserve assets—make large-scale capital flight from banks unlikely. Instead, he expects most stablecoin demand to originate from foreign savers in emerging markets with limited access to dollar assets. “Stablecoins help these individuals enjoy the benefits of dollar stability without relying on fragile or restrictive domestic banking systems,” he said.
However, he also warned of systemic vulnerabilities, including runs on stablecoins during market stress and the possibility of disrupting monetary transmission if funds shift rapidly between banks and stablecoin issuers. “Stablecoins perforate barriers to dollar access,” Miran observed, “but perforations can also become fault lines.”
Despite these challenges, he described stablecoins as part of a necessary modernization of U.S. financial infrastructure. “America’s capital markets are the world’s deepest,” he said. “But our financial infrastructure could use a reboot—and stablecoins may lead the way.”
Takeaway
