Bank of America CEO warns: Interest-bearing stablecoins could draw up to $6 trillion in deposits from the US banking system.

According to a report by Cointelegraph, Bank of America CEO Brian Moynihan warned during an earnings call that interest-bearing stablecoins could siphon up to $6 trillion in deposits from the U.S. banking system if issuers are allowed to pay interest. Moynihan cited research from the U.S. Treasury Department indicating that a significant amount of bank deposits could be diverted to stablecoins due to such products. He stated that these products would operate more like money market mutual funds, with funds held in cash, central bank reserves, or short-term Treasury bonds rather than for lending. He believes this deposit migration will shrink bank deposits, weakening credit supply capacity, particularly impacting small and medium-sized enterprises that rely more on bank loans than capital markets, and potentially driving up overall borrowing costs.