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Citi Executive Warns Stablecoin Yields Could Drain Bank Deposits
An anonymous reader quotes a report from CoinTelegraph: Paying interest on stablecoin deposits could spark a wave of bank outflows similar to the money market fund boom of the 1980s, Citi's Future of Finance head Ronit Ghose warned in a report published Monday. According to the Financial Times, Ghos...
According to the Financial Times, Ghose compared the potential outflows caused by paying interest on stablecoins to the rise of money market funds in the late 1970s and early 1980s. "Banks may face higher funding costs by relying more on wholesale markets or raising deposit rates, which could make credit more expensive for households and businesses," he said. In a recent letter, the organization argued that the so-called loophole may disrupt the flow of credit to American businesses and families, potentially triggering $6.6 trillion in deposit outflows from the traditional banking system.
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