Fed's Miran says stablecoin surge could help push interest rates lower

Core Viewpoint - The surge in demand for dollar-denominated stablecoins could lead to lower U.S. interest rates, as suggested by Fed Governor Stephen Miran [1][2]. Group 1: Impact on Interest Rates - Miran indicated that the growth of stablecoins could push the Fed's benchmark rate down by 0.4 percentage points [2]. - He emphasized that stablecoins are increasing demand for U.S. Treasury bills and other dollar-denominated liquid assets, particularly from international buyers [2][3]. - The rise of stablecoins may structurally lower borrowing costs for an extended period [3]. Group 2: Economic Implications - Miran's arguments suggest that a lower neutral rate of interest (r-star) necessitates lower policy rates to support economic health [5]. - He warned that failing to adjust rates in response to a reduction in r-star could be contractionary for the economy [5]. - The potential for stablecoins to become a multitrillion-dollar market could significantly influence central banking policies [2][4].