BIS Working Papers Trace Stablecoins Into Monetary Transmission
June's twelve BIS working papers converge on how household beliefs, sovereign debt and stablecoin balance sheets now sit inside the pipeline that carries a policy rate decision into the economy.
June's cohort of twelve BIS working papers leans heavily into monetary policy transmission, which claims seven of the twelve entries, and the more distinctive pattern is how many of those papers trace transmission through channels a textbook a decade ago would not have listed: household perception surveys, deposit competition shaped by social media, and stablecoins running through both the monetary and financial-stability clusters at once.
Two papers test how the public and markets actually read policy signals. Monetary policy according to households: perceptions, reactions and channels surveys more than 25,000 US households with randomized information treatments to gauge how they expect a change in the federal funds rate to filter into their own spending and saving decisions, putting real household beliefs into the transmission mechanism rather than an assumed rational-expectations stand-in. Bond yield responses to macro news: the role of macro forecast disagreement and monetary policy uncertainty turns the same question toward markets, using intraday Treasury futures data to show that forecast disagreement dampens the yield-curve reaction to a data surprise while monetary policy uncertainty amplifies it, with inflation surprises the one case where that amplification only appeared after the post-pandemic inflation surge.
The month's clearest cross-cluster thread is stablecoins, examined as a balance-sheet and macro-financial question across four papers spanning the monetary-transmission and financial-stability clusters. The digitalisation of banking and social media: implications for deposit pricing uses branch-level US data to show digital banking and social-media attention now jointly shape deposit rate levels and how fast they adjust to policy changes, setting up the terrain stablecoins compete on. The anatomy of stablecoin transactions mines 141 million Ethereum transactions and 593 million event logs to show that stablecoin transfers are largely legs embedded in atomically bundled trading, lending, arbitrage and settlement activity, with plain payment transfers making up a smaller share of the flow than raw volume suggests. The macroeconomics of stablecoins builds a quantitative macro model around two opposing channels: household demand for stablecoins raises deposit rates and squeezes bank loan supply, while issuers' own demand for Treasury bills lowers sovereign borrowing costs and widens fiscal space. Making stablecoins stable(r): can regulation help? models an issuer's capital, cash and bond choices under persistent stablecoin flows and finds that, left unregulated, issuers hold too little capital and tilt toward interest-bearing but less liquid bonds, a result aimed at the prudential design questions regulators are working through now.
A second thread ties sovereign debt back into the transmission story. Financial and real effects of fiscal risk extracts country-specific fiscal risk shocks from a daily Bayesian VAR on sovereign and safe corporate bond yields, isolating episodes of portfolio rebalancing toward private safe assets and tracing their real-economy effects. Public debt and monetary policy transmission: evidence from advanced and emerging Europe complements it with panel local projections over 2001 to 2020, finding that the level and maturity structure of public debt materially changes how euro area monetary policy shocks propagate through the economy.
The remaining financial-stability and bank-credit papers round out the month without breaking from its logic. Asset price bubbles and systemic risk in money market funds studies 3,500 US money market funds from 2004 to 2022 and finds fund-level characteristics shape how much systemic risk a fund contributes once a bubble forms. Embracing carbon uncertainty in portfolio construction proposes folding a carbon-return concept, modeled as an uncertain random variable, into sovereign bond portfolio construction alongside financial returns. The credibility of bail-in revisits Credit Suisse's March 2023 failure as the first real test of the post-crisis resolution framework for globally systemic banks, examining why authorities departed from the pre-agreed resolution plan under stability pressure. Credit supply in the wake of distressed bank acquisitions supplies the micro-level counterpart, tracing a Spanish bank's sale-of-business resolution and showing the acquirer preserved lending to the riskiest inherited borrowers by reallocating away from more capital-intensive exposures elsewhere in its book, even under tighter capital conditions.
Across all twelve papers the research agenda reads as an attempt to re-map monetary transmission for a system where household beliefs, sovereign debt stocks and stablecoin balance sheets now sit inside the pipeline between a rate decision and its effect on the economy. No new BIS Quarterly Review fell within June, so the working-paper cohort stands as the month's complete signal.