Fed Member Miran: Stablecoin Issuance Could Lower Interest Rates

Important Statements from Fed Member Stephen Miran

Federal Reserve Board Member Stephen Miran stated that the issuance of stable cryptocurrencies, known as stablecoins, has the potential to lower economic interest rates in the long run.

Relationship Between Stablecoins and Neutral Interest

Miran expressed that the proliferation of stablecoins could lead to a decrease in the levels defined as "neutral interest", which neither accelerates nor slows down the economy.

His Words Are Guiding the Markets

Speaking at an event held at the Harvard Club in New York, Miran noted that even cautious forecasts regarding the growth of stablecoins have increased the supply of lendable funds in the market, thereby lowering neutral interest rates. This situation has the potential to create significant changes in the markets.

Decrease in Neutral Interest Levels

Miran said, "If the neutral interest level is lower, then both private sector and public sector interest rates need to be lower to maintain healthy economic conditions. If the central bank does not lower rates when the neutral interest falls, it could have a constricting effect on the economy."