Citi’s Ronit Ghose raised concerns that interest on stablecoin deposits might lead to significant outflows from banks, drawing parallels to the surge in money market funds in the late 1970s and early 1980s. With bank withdrawals surpassing new deposits by $32 billion during this period, Ghose emphasized that such shifts could increase banks' funding costs and credit prices. Sean Viergutz from PwC voiced similar concerns, highlighting potential challenges for banks in maintaining deposits amidst a competition for higher yields. Despite regulations currently prohibiting stablecoin issuers from offering interest, some US banking groups are advocating for changes that could inadvertently allow this. They warn that high-yield stablecoins may divert up to $6.6 trillion from traditional banks, affecting credit flow to businesses and families. The US government is considering how to accommodate dollar-pegged stablecoins to ensure they bolster the dollar's status as a global reserve currency.

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