The White House published research arguing that banning yield on stablecoins would do little to support bank lending, including at community banks. In its baseline model, eliminating stablecoin yield increases total bank lending by $2.1 billion, or just 0.02%, while carrying a net welfare cost of $800 million.
The paper says large banks would account for 76% of that additional lending, while community banks would generate the remaining 24%. For community banks, that amounts to about $500 million in extra lending, or a 0.026% increase, far below the kind of systemic impact often suggested in arguments for stricter yield restrictions.
The sharper point in the paper is that the tradeoff looks weak even before assumptions get aggressive. The White House economists argue that a yield prohibition would forgo consumer benefits from competitive returns while offering only limited protection for bank credit creation, which makes the case for broad restrictions look much less convincing on its own numbers.
Source: The White House.
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