Top central bankers echoed ICBA’s concerns about the impact of stablecoins on community banks.
Details: Speaking at the Jackson Hole Economic Symposium hosted by the Federal Reserve Bank of Kansas City:
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Bank for International Settlements General Manager Pablo Hernández de Cos said if stablecoin reserves were predominantly held as wholesale bank deposits, it would tighten lending conditions, especially at smaller banks.
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International Monetary Fund Managing Director Kristalina Georgieva said competition is beneficial but not if it drains banks’ deposit base and raises their funding costs to the point of impairing economy-wide credit.
Real-World Effect: An ICBA economic data analysis shows that failing to extend the prohibition on stablecoin yield via the Clarity Act could reduce community bank lending by $850 billion, while an ICBA interactive map details how stablecoin growth could put small-business credit at risk.
On the Agenda: World leaders are also expected to discuss issues with digital assets during the G20 meeting in Asheville, N.C. Agenda topics include establishing clearer legal and regulatory frameworks for digital assets while strengthening efforts against illicit finance tied to them.