Fed Study Says Stablecoins Could Improve Cross-Border Payments but Disrupt Monetary Policy

A Federal Reserve study found that dollar-backed stablecoins operating under the GENIUS Act’s regulatory framework could bypass costly, complex correspondent banking networks, making cross-border payments faster and more transparent. Because stablecoins are typically pegged at $1, the composition of their reserves could also alter demand for bank deposits and short-term dollar assets.

The Fed’s latest report said regulated stablecoins could reduce remittance fees and settlement friction, but did not provide a single estimate of potential savings or cost reductions. It also warned that rapid growth in issuance could lead operators to concentrate their holdings in bank reserves or U.S. Treasury securities, changing the structure of the Fed’s balance sheet and interfering with interest-rate control and monetary-policy transmission.