NextFin news, On November 7, 2025, Federal Reserve Governor Stephen Miran delivered a pivotal speech addressing the growing impact of stablecoins on the United States' financial system, focusing particularly on the rising demand for U.S. Treasury securities. Speaking at an event streamed from Washington D.C., Miran emphasized that stablecoins—digital assets typically pegged to the U.S. dollar—are no longer niche instruments but a fast-expanding component of the global payment ecosystem.
Miran explained that stablecoins facilitate more efficient access to dollar assets globally, especially in emerging market economies and jurisdictions with restricted access to dollars or fragile financial infrastructures. This increased dollar accessibility through stablecoins drives foreign investor appetite for dollar-denominated liquid assets such as short-term Treasury bills. Notably, Miran linked stablecoin demand growth to the recently enacted GENIUS Act, legislation that provides a clear regulatory framework requiring U.S.-based stablecoin issuers to back their outstanding coins with safe, liquid dollar assets including Treasurys.
This regulatory clarity, Miran noted, legitimizes stablecoins as core components of the payment system, encouraging scale and transparency. He cited industry projections estimating stablecoin market size could reach between $1 trillion and $3 trillion by decade’s end, underscoring that this magnitude of additional demand for U.S. Treasury assets could substantially lower borrowing costs for the federal government.
However, Miran also highlighted challenges for monetary policy, focusing on how stablecoins might exert sustained downward pressure on the neutral interest rate (r*), a critical benchmark guiding Fed rate policy. Drawing parallels to the early 2000s global saving glut described by former Fed Chair Ben Bernanke, Miran estimated that stablecoin-driven demand could represent roughly 30-60% the magnitude of that historic phenomenon, influencing the supply of loanable funds and the pricing of risk-free assets.
He raised open questions about the stability of stablecoin funding sources, the potential for bank disintermediation, and systemic risks including the possibility of runs on stablecoin issuers. Importantly, Miran observed that stablecoins are expected to satisfy substantial foreign demand, especially from regions with capital controls or unstable local currencies, thus extending the global dominance of the U.S. dollar.
From a macro-financial perspective, the growing stablecoin footprint may increase dollarization abroad, impacting exchange rate volatility and the transmission of U.S. monetary policy beyond domestic borders. Miran cautioned that as r* declines, the likelihood of hitting the zero lower bound increases, complicating future Fed accommodation efforts and potentially resulting in greater policy rate volatility.
This transformative trend also calls attention to the need for improved financial market infrastructure, as stablecoins could pioneer a more efficient, inclusive, and interoperable dollar-based payment system globally. Miran welcomed these developments but warned that empirical research and policy frameworks must evolve rapidly to address associated risks and monetary policy implications.
According to the Federal Reserve Board and Miran’s speech transcript published on federalreserve.gov, the stablecoin ecosystem’s expansion is reshaping the demand for U.S. Treasurys by creating new pools of dollar liquidity, especially outside the traditional banking and capital markets frameworks, thus introducing a multitrillion-dollar dynamic that monetary policymakers cannot ignore.
Looking forward, if stablecoin adoption follows these optimistic forecasts, U.S. Treasury markets could see amplified foreign participation, lowering yield curves and borrowing costs but simultaneously challenging the Fed’s rate-setting priorities and financial stability oversight. The demand profile may also induce a stronger U.S. dollar, necessitating careful consideration of exchange rate effects on inflation and employment mandates under President Donald Trump’s 2025 administration.
In summary, Governor Miran’s insights underscore stablecoins’ dual role as both market innovation catalysts and systemic influences on monetary policy transmission and capital flows. Policymakers will need to balance fostering technological innovation with managing macroeconomic risks and ensuring robust regulatory oversight in a rapidly digitizing financial landscape.
