Former House Speaker Paul Ryan: Stablecoins Can Help Fight an Upcoming US Debt Crisis and China's Growing Influence

Paul Ryan, a former speaker of the House of Representatives, has assessed the possible role that stablecoins will play in fighting an upcoming U.S. debt crisis. According to Ryan, the demand derived from the increasing relevance of dollar-backed stablecoins, which use U.S. treasuries as backing, will help keep a healthy demand on U.S. debt and counter the growth of the Chinese yuan in international markets.

Paul Ryan: Stablecoins Might Help Avoid a U.S. Debt Crisis

Paul Ryan, Republican politician and former speaker of the House of Representatives, has referred to the relevance that stablecoins might have for the future of the U.S. debt. In a recent opinion piece, Ryan discusses that the exploding U.S. debt, currently hovering over $34 billion, is poised to test the American experiment if politicians fail to address the increased budgetary spending.

A failed Treasury auction would kickstart this crisis, forcing budgetary cuts and destroying the trust behind the U.S. dollar. At the same time, while the dollar is still the international reserve benchmark currency, countries like Saudi Arabia and China have been shedding their treasury holdings and seeking alternatives to settle payments outside the dollar-led financial system.

This is where stablecoins come in, as a source of demand for treasuries and U.S. dollars that are not driven by state nations, but by institutions and individuals in weak economies. Ryan remarked that stablecoins should be taken seriously, as they would be held outside the top ten nations owning U.S. debt. if combined.

This financial battle would also extend to international markets, Ryan states, where China seeks to embed the yuan using investment and infrastructure in emerging markets. Using stablecoins in public blockchains would counter the growth of the yuan’s influence, as they would come “packaged with the deeply American values of freedom and openness.”

Promoting dollar-backed stablecoins would create an “immediate, durable increase in demand for U.S. debt, which would reduce the risk of a failed debt auction and an attendant crisis,” Ryan concluded.

Tether, the company behind USDT, the largest stablecoin in crypto markets, had referred to this issue before. In a September report titled “Tether USDT and U.S. Treasury Dynamics,” the company declared that “as foreign purchasing of treasuries declines, and issuance of U.S. debt is slated to increase, Tether is able to help support US and global financial stability.”

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