**Fed Governor Stephen Miran: Surge in Dollar-Denominated Stablecoins Could Lower U.S. Interest Rates**
Fed Governor Stephen Miran suggested on Friday that the growing demand for dollar-denominated stablecoins might contribute to pushing U.S. interest rates lower. Speaking to an audience of economists in New York, the central bank official—an appointee of President Donald Trump—noted that the surge in crypto tokens pegged to the dollar could suppress what economists call “r-star,” or the neutral rate of interest that neither stimulates nor restrains economic growth.
“If that happens,” Miran explained, “the Fed might need to lower its own policy rate to avoid unintentionally slowing the economy.” He added, “Stablecoins may become a multitrillion-dollar elephant in the room for central bankers.”
Miran highlighted that stablecoins are already increasing demand for U.S. Treasury bills and other dollar-denominated liquid assets among buyers outside the United States. He expects this demand to continue growing in the near future.
Citing prior research, Miran mentioned that the growth of stablecoins could push the Fed’s benchmark interest rate down by approximately 0.4 percentage points.
During his relatively short tenure on the Fed board, Miran has been an advocate for aggressive rate cuts. He believes the neutral rate is considerably lower than many of his colleagues assume. His recent remarks extend this viewpoint into the realm of digital finance, suggesting that the rise of stablecoins might structurally lower borrowing costs for years to come.
Previously, Miran’s arguments have focused largely on the importance of moderating inflation and ensuring the Fed does not impede economic growth by raising rates prematurely. The stablecoin discussion adds a new dimension to the case for easier monetary policy.
“Even relatively conservative estimates of stablecoin growth imply an increase in the net supply of loanable funds in the economy that pushes down the neutral rate,” Miran said.
He emphasized that if the neutral rate is indeed lower, “policy rates should also be lower than they would otherwise be to support a healthy economy. A failure of the central bank to cut rates in response to a reduction in [r-star] is contractionary.”
Miran is expected to leave the Federal Reserve in January when the unexpired term he is currently filling comes to an end.
https://bitcoinethereumnews.com/finance/feds-miran-says-stablecoin-surge-could-help-push-interest-rates-lower/
