Emerging from the Fed’s recent remarks, the spread of stablecoins now features prominently in monetary‑policy considerations. Miran’s commentary places these digital assets—not just cryptocurrencies in general—at the heart of future interest‑rate strategy, at a time when global inflation pressures and economic slack still loom.

Stablecoins and Loanable Funds: Why r* Might Fall

In his speech at the BCVC Summit on November  7, 2025, Miran argued that stablecoins—especially those denominated in U.S. dollars—can increase the supply of loanable funds in the U.S. economy, pushing down the neutral interest rate (r*) and thus lowering the level at which the Fed can safely set policy rates.

Miran cites private‑sector estimates compiled by Fed staff that project stablecoin growth to the $1 trillion–$3 trillion range by the end of the decade. He notes that even modest growth in stablecoins could reduce r* by around 40 basis points according to one model. If r* falls, maintaining current policy rates could become unintentionally restrictive—a contractionary stance.

For Israeli and global investors, this suggests that the longer‑term structural backdrop may favour a lower neutral rate environment, pushing central banks to reconsider the entire interest‑rate trajectory.

Global Dollar Flows, Treasury Demand and Banking Channel Risks

A critical part of Miran’s argument is that dollar‑denominated stablecoins bolster the dollar’s international role. He states that stablecoins “allow an ever‑growing share of people around the globe to hold assets and conduct transactions in the most trusted currency.” This dynamic supports foreign demand for U.S. Treasuries and other liquid dollar assets, lowering yields and U.S. borrowing costs.

However, Miran also warns of risks to banking and monetary‑policy transmission. If stablecoins draw deposits from banks or weaken bank intermediation, the Fed’s ability to steer the economy through traditional channels may be impaired. ([Federal Reserve][1]) For the Israeli context, where global dollar flows and foreign‑currency exposures matter, such developments could influence currency markets, dollar‑funding conditions and cross‑border flows.

Implications for Monetary‑Policy Strategy and Market Expectations

Miran’s remarks come as the Fed begins to reassess the policy rate outlook amid weakening inflation and global uncertainties. While he stopped short of declaring an imminent cut, his emphasis on stablecoins as a structural force adds a new twist to the policy debate.

Markets may interpret the message as increasing odds of earlier or deeper rate cuts than previously priced, though the magnitude remains uncertain. Moreover, central banks globally (including the Bank of Israel) may need to monitor digital‑asset flows and their impact on capital‑account dynamics and domestic financial conditions.

Looking ahead, investors should track stablecoin‑market size, regulatory developments (such as the U.S. “GENIUS Act” noted by Miran) and metrics of currency‑substitution that might accelerate dollar demand via digital rails. On the risk side, stablecoins remain experimental and issues around reserves, liquidity or regulation could limit the growth envisioned by Miran. On the opportunity side, a structurally lower neutral rate environment may support higher valuations for long‑duration assets—though only if inflation is kept in check.