Stablecoin Adoption Threatens to Lower Economic Interest Rates, Fed Official Warns

Fed Governor Stephen Miran has expressed concern that the increasing adoption of stablecoins may lower the long-term equilibrium interest rate (R-star) in the economy. His argument is that these digital tokens, backed one-to-one by traditional reserves like cash and Treasury bills, inject liquidity into financial markets, altering the balance between savings and investment. This shift, according to Miran, puts downward pressure on interest rates, potentially requiring the Fed to maintain a permanently lower policy rate.