The Bank for International Settlements has published a research paper concluding that commercial banks retain a powerful brake on stablecoin expansion: the interest rate they pay on deposits. The finding reframes a debate that has largely centered on regulation and issuer reserves, and points instead to a competitive mechanism that incumbent banks control directly.

The paper's core argument is straightforward. Stablecoins, in most current designs, pay holders nothing. Traditional bank deposits, by contrast, can be repriced upward. If banks respond to stablecoin inflows by offering savers more attractive rates, they can blunt the incentive to move funds on-chain. The deposit rate becomes a defensive lever, and it is one that banks can pull without awaiting legislative approval.

This matters for practitioners on both sides of the trade.

What does the finding change for issuers?

For stablecoin issuers, the BIS analysis identifies a structural vulnerability in the prevailing business model. Issuers earn yield on the reserve assets backing their tokens, typically short-dated government paper, while token holders receive zero. That spread funds operations and profit. In a low-rate environment, the opportunity cost to a saver of holding a non-yielding stablecoin is modest, and the convenience benefits of on-chain settlement can offset it.

When deposit rates rise, the arithmetic shifts. A saver comparing a checking account that pays interest against a stablecoin that pays none faces a quantifiable annual cost for every dollar held on-chain. The higher the policy rate, the larger that penalty. The BIS paper positions this as a self-correcting mechanism: stablecoin growth accelerates when banks underpay depositors, and decelerates when banks compete on yield.

Issuers have limited responses available. Passing reserve yield through to holders would compress the revenue that sustains issuance, custody and compliance operations. Structuring yield-bearing tokens, where jurisdictionally permitted, raises securities-law and regulatory-perimeter questions that vary by market. The paper's implication is that the zero-yield design, which has supported issuer economics to date, is also the design most exposed to deposit competition.

What does it change for banks?

For commercial banks, the finding cuts the other way. Deposit flight toward stablecoins is often presented as a one-way structural trend. The BIS analysis suggests banks are not passive. Raising deposit rates reduces the funding advantage issuers enjoy, and the cost of doing so can be weighed against the cost of losing deposit balances altogether. Treasury and liquidity managers gain a framework for pricing that decision rather than treating outflows as inevitable.

The paper also situates the question within the BIS's broader work program on tokenization and wholesale settlement, where the institution has consistently argued that tokenized forms of money will compete with, rather than simply replace, commercial bank deposits.

Why practitioners should read the mechanism, not the headline

Market participants have tended to assess stablecoin growth against regulatory milestones: issuance frameworks, reserve disclosure requirements, and legislative milestones in major jurisdictions. The BIS paper adds a monetary variable to that list. The interest-rate channel means that stablecoin adoption is sensitive to the rate cycle in a way that payment-network adoption historically was not.

For corporate treasury teams evaluating on-chain settlement, the paper raises a practical question: what does holding a non-interest-bearing stablecoin cost per year against the current deposit alternative? That number moves with policy rates, and the BIS work implies banks will increasingly force savers to ask it.

The competitive dynamic the paper describes will be tested as issuance frameworks come into force and as rate policy evolves. If banks reprice deposits aggressively while issuers hold the zero-yield line, the constraint the BIS identifies becomes measurable in flow data rather than theoretical.