Fed Researchers Propose Framework for Tracking Stablecoins in Money Supply

Authors Kristen Payne and Mary-Frances Styczynski propose that payment stablecoins could mirror traditional financial instruments if their usage patterns align with existing definitions. Under this model, assets serving as a medium for household purchases or business transfers would qualify for M1—the category for highly liquid money—while tokens primarily used to store value or trade crypto would sit within M2. The researchers emphasized that this paper reflects their personal analysis rather than an active shift in Federal Reserve policy.

Integrating these digital assets presents complex technical challenges, most notably the risk of double-counting. Because stablecoin issuers often back their tokens with Treasury bills or bank deposits, including the full value of circulating tokens could lead to an inflated money supply if those underlying reserves are already captured in official statistics. Furthermore, the global nature of blockchain transactions makes it difficult to isolate domestic holdings from international ones, necessitating new reporting standards before any formal inclusion can occur. While tokenized bank deposits are already counted within existing aggregates as conventional liabilities, payment stablecoins require a distinct, usage-based approach to ensure statistical accuracy.