Viewpoint: Promoting the issuance of stablecoins may increase liquidity supply in the short term

Odaily News Yi He, chief macroeconomist of Huatai Securities, pointed out that relaxing bank supervision and promoting the issuance of stablecoins may increase the demand for U.S. Treasuries and liquidity supply in the short term, and even smooth out the contradiction between supply and demand of U.S. Treasuries to a certain extent. However, the short-term demand for "creating" U.S. Treasuries may instead amplify the long-term risks of U.S. Treasuries.
In addition, the "Big and Beautiful" bill is expected to push up the US fiscal deficit by more than $4 trillion over the next decade, exceeding the previous House version. Deutsche Bank has previously pointed out that the bill may vigorously promote the US dollar stablecoin, increase domestic financial repression, put pressure on the Federal Reserve to cut interest rates and significantly weaken the US dollar. (Caixin.com)