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Analysis: Issuing Stablecoins May Increase Short-Term Liquidity Supply
Summary: In a recent analysis, Huatai Securities' chief macroeconomist Yi Yu pointed out that relaxing bank regulations and promoting the issuance of stablecoins could potentially increase demand for US bonds and liquidity supply in the short term, even to some extent easing the supply-demand contradiction of US bonds. However, in the short term, the 'creation' of ...
In a recent analysis, Huatai Securities' chief macroeconomist Yi Yu pointed out that relaxing bank regulations and promoting the issuance of stablecoins could potentially increase demand for US bonds and liquidity supply in the short term, even to some extent easing the supply-demand contradiction of US bonds. However, in the short term, the 'creation' of US bond demand may actually amplify long-term risks for US bonds.
Additionally, the 'Big and Beautiful' bill is expected to increase the US fiscal deficit by over $4 trillion in the next decade, surpassing the previous House version. Deutsche Bank has already indicated that this bill may strongly promote the US dollar stablecoin, increase domestic financial repression, pressure the Federal Reserve to cut interest rates, and significantly weaken the US dollar. (Caixin)
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