According to their economic modeling, banning stablecoin rewards would boost bank lending by $2.1 billion at a net welfare cost of $800 million, an increase in lending of 0.02%.
Community banks would conduct just 24% of that additional lending, amounting to $500 million—a 0.026% increase on current figures.
Even “stacking every worst-case assumption,” requiring the stablecoin market to grow sixfold, the report’s authors noted that community banks would see only a 6.7% lending increase, or $129 billion.
“The conditions for finding a positive welfare effect from prohibiting yield are similarly implausible,” they wrote, adding that a block on stablecoin yield would “do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings.”
