Fed Proposes Framework for Stablecoin Inclusion in US Money Supply Statistics

The Federal Reserve has proposed a framework for deciding how stablecoins and other blockchain-based financial products fit into U.S. money supply statistics, specifically M1 and M2.

A study by Kristen Payne and Mary-Frances Styczynski examined payment stablecoins, tokenized bank deposits, and tokenized money market funds in relation to their economic function and the reliability of collected data.

The researchers noted that while payment stablecoins are not currently included in M1 or M2, they could fit into either category depending on how households and businesses use them. If used mainly as a medium of exchange, they would share transactional features with M1, whereas if used primarily for short-term savings, they would be more consistent with the non-M1 portion of M2.

The study also highlighted that adding stablecoins to M1 or M2 is not as simple as counting every token in circulation, due to the creation of a double-counting risk from stablecoin reserves. The $GENIUS Act's disclosure requirements could provide part of the necessary data, but regulators still need common reporting standards.

Tokenized deposits are already counted as money and do not create a double-counting problem, while tokenized money market funds remain in M2 due to their classification mainly as stores of value. The researchers stressed that the paper reflects personal views and does not represent a Federal Reserve policy decision or active deliberation.