Bankless Podcast Episode Summary

"The Unbundling of Banks: How Stablecoins Change Everything" | Guest: Charles Calomiris

Release Date: September 22, 2025

Overview

This episode features economist and banking historian Charles Calomiris in a sweeping discussion of how stablecoins and blockchain finance are unbundling the traditional functions of banks. The conversation dissects the deep historical roots of banking as political institutions, explores the ongoing transformation driven by stablecoins, and issues a call to political action for crypto proponents. Calomiris argues that technological advancements alone are insufficient to disrupt entrenched financial interests—true change in money and payments requires understanding and engaging with political realities.

Key Discussion Points & Insights

1. The Core Function and History of Banks

• Banks are Political Creations:
  Calomiris emphasizes that banks are not just financial intermediaries, but products of the nation-state. Modern banking began with state charters around the 1600s, and these charters are political bargains that give banks special privileges and responsibilities.

  "Banks are the sine qua non of the nation state... Every nation state charters banks." — Calomiris [00:58]

• Charters as Political Bargains:
  A bank charter isn’t just a regulatory license, but the result of negotiation among political coalitions within a country. Charters define not just permissions but privileges, powers, and even potential bailouts.

2. The Political Economy of Stablecoins

• Crypto is Political, Not Just Technological:
  Calomiris underscores that the evolution of stablecoins is governed as much by politics as by technology. Both the Trump and Biden administrations sought to slow the rise of stablecoins, captured by incumbent banking interests.

  “If you think stablecoins are technologically determined... you’re really missing the boat.” — Calomiris [17:52]

• The Genius Act as a Political Shift:
  The Genius Act (recent US legislation) is noted as an inflection point — it chartered stablecoins, bringing them into the mainstream, but this only occurred after political coalitions began shifting due to stablecoins’ unstoppable growth.

  “You can’t run stable coins without a charter. That’s what the Genius Act did.” — Calomiris [20:06]

3. Unbundling of Bank Functions

• Traditional Bundling Explained:
  Historically, banks combined payment systems (like checking/deposits) and lending due to information costs and political convenience.
• Unbundling via Stablecoins:
  Stablecoins and DeFi are severing these functions, as evidenced by “shadow banks” (fintechs, stablecoin issuers, and non-bank lenders) specializing in either payments or lending.

  “What we’re talking about is... look at the shadow banks. Stablecoin providers aren’t trying to do lending. Lending providers aren’t trying to do stablecoins.” — Calomiris [34:42]

• Threat to Incumbent Banks:
  Removing payments from banks’ control undermines their subsidized, semi-monopolistic business model.

4. Political Power of Incumbents

• Influence through Organizations:
  Calomiris points out entities like the Bank Policy Institute (BPI), likening it to “Darth Vader on steroids” for its power to organize and fight pro-crypto reforms.

  "It's Darth Vader on steroids... This group is not just about colluding... but using their power to try to stop things that will help citizens in favor of themselves." — Calomiris [36:40]

• Activist Group Contracts:
  During the banking merger waves of the 1990s–2000s, activist organizations received around $2.5 Trillion from banks in exchange for political support—showcasing the size of the political machine behind banking.

  “No. From 1995 to 2007, two and a half trillion dollars of contracts... That’s why nobody gets it.” — Calomiris [26:14]

5. Stablecoins, Yield, and the Status Quo

• Yield Controversy:
  There's a political battle over whether stablecoin holders should receive interest ("yield") from the assets backing these coins. Presently, issuers can’t pay yield directly due to the Genius Act, but intermediaries can via various mechanisms.
• Incumbent Bank Arguments Debunked:
  Calomiris rebuts prominent arguments against yielding stablecoins, such as the risk of bailout (as with money markets), deposit flight, and threats to financial stability.

  “Limiting the interest on stablecoins is so stupid... It shows you how the incumbents hate you. They hate the American public. They have only contempt for us.” — Calomiris [59:37]

• Alternative Structures Suggested:
  Proposes that stablecoins could be constructed more like perpetual preferred stock, supporting direct payment of interest/yield without banking-style bailouts.

6. Stablecoins and the Dollar’s Global Role

• Short-term Dollarization:
  The rise of stablecoins will likely strengthen the dollar’s role globally, as most stablecoins are dollar-denominated.

  “The growth of stablecoins will actually strengthen the role of the dollar in global markets.” — Calomiris [61:46]

• Future Unit of Account Innovation:
  Predicts blockchain-based finance could allow for new, more optimal units of account tied to actual consumption baskets, potentially allowing for regional and even global “dollars” tailored to users’ needs.

7. The Political Game Ahead

• Continuous Political Battle:
  Even after stablecoin-friendly legislation, the political struggle will not end. Entrenched interests will work constantly to adapt and maintain privileges.

  “You never win the battle. You have to be ever vigilant.” — Calomiris [91:01]

• Call to Action:
  Calomiris urges crypto advocates to organize politically. Mere technological savvy is not enough; collective action is required.

  “There’s no such thing as decentralized political activity. You have to create organized groups to promote this future.” — Calomiris [47:09]

Notable Quotes & Memorable Moments

• On the Fundamental Role of Banks:
  “Banks are the sine qua non of the nation state... That a nation state creates rules for the existence of banks that it regulates. The chartering of banks is all about deciding as a nation state that the functions of banks have to be ruled by the political nation...” — Calomiris [01:00]
• On the Political Challenge:
  “What we just experienced is how much the political winds have affected the timing and capabilities of the empowerment of crypto... The main obstacle to getting that to happen is the resistance... from members of powerful coalitions who have vested interest.” — Calomiris [19:32]
• On Stablecoins Threatening Banks:
  “The history of chartered banks has been the combining of payment system services with lending. But if technology changes information costs, the rationale for bundling evaporates... That’s exactly what I believe, that bundling made economic sense for banks and no longer does.” — Calomiris [31:03]
• On Bank Policy Institute (BPI):
  “It’s Darth Vader on steroids... This group is not just about colluding... but using their power to try to stop things that will help citizens in favor of themselves.” — Calomiris [36:40]
• On Stablecoin Regulation:
  “If you think that because we are forward looking people who like technology and want to see good technologies happen, that they will automatically happen, it’s not true. You have to be a political force to build a coalition that represents the public’s interest.” — Calomiris [46:15]
• On Political Organizing in Crypto:
  “There’s no such thing as decentralized political activity. You have to create organized groups to promote this future.” — Calomiris [47:09]
• On Yield and Stablecoins:
  “Limiting the interest on stablecoins is so stupid... It shows you how the incumbents hate you. They hate the American public... How disgusting are these incumbent banks?” — Calomiris [59:37]
• On Dollar’s Future Role:
  “You could even imagine constructing... a global dollar as a unit of account, which would have appeal by virtue of the fact that it is more linked to the global consumption bundle... Maybe one way to compete to preserve the role of the dollar, maybe one way to do it is to make the dollar better.” — Calomiris [80:09]
• On Vigilance and Activism:
  “You never sleep. Politicians and their coalition never sleep. And you better not be sleeping either.” — Calomiris [91:01]
• Call to Action:
  “If you don't understand that everything is politically contingent, you can't isolate yourself... You have to organize and play the game, engage. And you haven't done it. Your generation hasn't done it. And I'm really sorry.” — Calomiris [87:48]

Important Segment Timestamps

• Historical Role of Banks & Political Bargains: [00:00] – [11:02]
• Stablecoins as Political Institutions: [17:29] – [20:06]
• Unbundling Payments & Lending (Shadow Banking/Stablecoins): [30:07] – [34:42]
• Bank Power, Mergers, and Activist Partnerships: [25:23] – [26:27]
• Yield, Risk, and Stablecoins Policy Debate: [50:45] – [60:27]
• Future of the Dollar & Units of Account: [61:46] – [83:03]
• Call to Political Action: [87:40] – [94:13]

Final Takeaways

• Disruption in banking is not just about technology — it is constrained and shaped by politics and entrenched interests.
• Stablecoins and blockchain can unbundle core bank services, challenging incumbent business models and undermining traditional privileges.
• The path forward for crypto and DeFi requires organized political advocacy, coalition building, and continuous vigilance.
• Crypto may strengthen the global role of the dollar in the short term, but opens possibilities for new units of account and monetary innovation — if the political will can be marshaled.
• “Going bankless” is as much about winning policy battles as it is about coding or economic theory.