Citi’s Ronit Ghose warned that paying interest on stablecoin holdings could trigger bank outflows akin to the 1980s, driving up funding costs and credit prices.
Paying interest on stablecoin deposits could spark a wave of bank outflows similar to the money market fund boom of the 1980s, Citi’s Future of Finance head Ronit Ghose warned in a report published Monday.
According to the Financial Times, Ghose compared the potential outflows caused by paying interest on stablecoins to the rise of money market funds in the late 1970s and early 1980s.
Those funds ballooned from about $4 billion in 1975 to $235 billion in 1982, outpacing banks whose deposit rates were tightly regulated, Federal Reserve data showed. Withdrawals from bank accounts exceeded new deposits by $32 billion between 1981 and 1982.
Read more