Fed Governor Stephen Miran on Friday suggested that rising demand for dollar-backed stablecoins could help push U.S. interest rates lower. Speaking to economists in New York, Miran, a Trump appointee, said the surge in crypto tokens pegged to the dollar may reduce the “neutral” rate of interest, known as r-star, which neither stimulates nor slows economic growth. If r-star declines, Miran said the Federal Reserve might need to lower its benchmark policy rate to avoid unintentionally slowing the economy. “Stablecoins may become a multitrillion-dollar elephant in the room for central bankers,” he said. “Stablecoins are already increasing demand for U.S. Treasury bills and other dollar-denominated liquid assets by purchasers outside the United States, and this demand will continue growing.” Citing research, Miran noted that stablecoin growth could lower the Fed’s benchmark rate by roughly 0.4 percentage point. He has long advocated for aggressive rate cuts, arguing that the neutral rate is lower than many Fed colleagues assume. His remarks extend that view to digital finance, suggesting that stablecoins could structurally reduce borrowing costs over the coming years. Miran’s comments come as the Fed balances inflation moderation with supporting economic growth. Stablecoin adoption, he explained, effectively increases the net supply of loanable funds in the economy. “Even relatively conservative estimates of stablecoin growth imply an increase in the net supply of loanable funds in the economy that pushes down the neutral rate,” he said. “If neutral is lower, policy rates should also be lower than they would otherwise be to support a healthy economy. A failure of the central bank to cut rates in response to a reduction in r-star is contractionary.” During his tenure on the Fed board, Miran has emphasized that central bank policy should avoid unintentionally slowing economic activity. He views stablecoins as a structural factor that could permanently influence interest rates. The growing market for digital assets, he added, is already increasing demand for safe, dollar-denominated instruments among international buyers, indirectly pressuring long-term borrowing costs. Miran is set to leave the Federal Reserve in January, when the unexpired term he is filling ends. His remarks underscore the intersection of traditional monetary policy with the expanding digital finance ecosystem and highlight potential challenges for the Fed in adjusting rates in response to new financial innovations.