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Staff Reports

Stablecoin Disintermediation

Number 1185
February 2026

JEL classification: D47, E41, E42, E58, G10, G21

Authors: Michael Junho Lee and Donny Tou

We propose a theory of stablecoin disintermediation, whereby stablecoins not only erode banks’ deposit franchises but also transmit liquidity stress to the banking system. Using transaction-level data linking on-chain transactions to wholesale interbank payments, we document the first evidence of liquidity-driven bank disintermediation. Stablecoins directly transmit liquidity shocks to the banking system: banks with stablecoin deposits experience substantial increases in payment demand and heightened liquidity exposure to daily stablecoin primary market activity. Consistent with theory, banks operate “narrowly” to support liquidity-hungry stablecoin deposits – requiring substantially larger bank reserve balances to mitigate potential shortfalls. Even as beneficiaries of stablecoin growth within the banking system, partner banks’ loan share of assets contracts relative to peers. Our results substantially broaden the scope for stablecoins to disintermediate banks, impact bank lending, and complicate monetary policy implementation.

Full Article

Author Disclosure Statement(s)

Michael Junho Lee
I have nothing to disclose.

Donny Tou
I have nothing to disclose.

Suggested Citation:
Lee, Michael Junho, and Donny Tou. 2026. “Stablecoin Disintermediation.” Federal Reserve Bank of New York Staff Reports, no. 1185, February. https://doi.org/10.59576/sr.1185

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