A new study from the White House released Wednesday found that banning yields on stablecoins would have very little impact on bank lending, challenging the banking industry’s claims that stablecoins would weaken their ability to lend to businesses and households.

The Council of Economic Advisers, a U.S. agency within the Executive Office of the President, noted that banning stablecoin yield would have a negligible impact on credit creation, increasing bank lending by only $2.1 billion, or roughly 0.02%. 

The 21-page report, which used data from the Federal Reserve and the Federal Deposit Insurance Corporation on deposits, lending, and bank liquidity, found that funds used to purchase stablecoins like USDC (CRYPTO: $USDC) and USDT (CRYPTO: $USDT) are often reinvested in assets such as Treasury bills and redeposited elsewhere in the banking system. In other words, the overall deposit levels remain mostly unchanged.   Furthermore, the researchers assert that restricting stablecoins could come at a cost to consumers, who would lose access to returns without seeing any meaningful improvement in credit availability or their ability to borrow, as well as other possible downsides, such as limiting competition and curtailing future innovation in the digital finance space. 

More From Cryptoprowl:

Ripple, The Company Behind XRP, Is Valued At $50 Billion

Eightco Secures $125 Million Investment From Bitmine And ARK Invest, Shares Surge

Blockchain Projects Decline 75% As Developers Shift To A.I.

Stanley Druckenmiller Says Stablecoins Could Reshape Global Finance

New York Stock Exchange Invests $600 Million In Polymarket

These findings come as policymakers continue to assess the role of stablecoins in the broader financial system and consider potential regulatory frameworks.