The American Bankers Association (ABA) is pushing back against the White House Council of Economic Advisers (CEA) stablecoin report tied to the long-awaited CLARITY Act, arguing that the debate is being framed in a way that misses the real policy risk.
ABA Pushes Back On CLARITY Act AnalysisAccording to the American Bankers Association’s statement released on Monday, April 13, the “live” question for policymakers is not whether banning yield on payment stablecoins would change lending in the near term.
Instead, the ABA says the central concern is what happens if yield on payment stablecoins is allowed—particularly whether it would encourage deposit flight, with the potential for deposit outflows to accelerate from community banks.
In its critique, the country’s oldest national trade association pointed to the CEA’s headline conclusion, which it characterized as an estimate that prohibiting yield would increase bank lending by about $1.2 billion.
The association argued that even a directionally correct result still does not answer the key question policymakers need answered: what would be the lending and funding-cost impact of allowing yield as stablecoins expand from today’s market to a much larger one.
Stablecoin Sector To Surpass $1 Trillion?The ABA argued that when the stablecoin market grows to a projected range of $1–$2 trillion, yield would not be a minor feature. Instead, it would be the “mechanism” that could speed up migration out of bank deposits.
The Association concluded by warning policymakers not to take comfort from a study showing that prohibiting stablecoin yield might have a small near-term effect on aggregate lending. The association said that it is not the contested scenario.
The contested scenario, according to the ABA, is whether allowing yield on payment stablecoins would accelerate deposit migration—again, especially from community banks—ultimately raising banks’ funding costs and reducing local credit availability.
Featured image from OpenArt, chart from TradingView.com
