On June 29, at the closed-door seminar on the "Future of Stablecoins" held by the New Economist Think Tank, Zhu Guangyao, former vice minister of the Ministry of Finance, shared his observations on the recent dynamics of stablecoins, interpreted the US policy adjustments on stablecoins, and after analyzing the relevant data on stablecoins, proposed my country's policy path to deal with stablecoins from a macro perspective.
Zhu Guangyao first defined the concept of stablecoins he discussed - stablecoins anchored to legal tender, while other forms of stablecoins and virtual currencies were not within the scope of this discussion.
Speaking of how stablecoins pegged to legal tender affect the international monetary system and international financial order, Zhu Guangyao said that stablecoins pegged to the US dollar will usher in the third stage of the Bretton Woods system.
The Bretton Woods Conference held in July 1944 established the Bretton Woods system, a framework for international monetary and financial order centered on the US dollar after World War II. The core of the system is the "double peg" mechanism: the US dollar is fixedly pegged to gold (1 ounce of gold is equal to 35 US dollars), and the currencies of other member countries are pegged to the US dollar, implementing an adjustable fixed exchange rate system. However, the system faces many pressures in its operation.
In 1971, the United States announced that it would stop converting US dollars into gold, marking the collapse of the core pillar of the Bretton Woods system. Subsequently, in 1973, major currencies switched to a floating exchange rate system, and the fixed exchange rate arrangement of the system officially ended. In order to maintain the core position of the US dollar, the United States reached an agreement with major oil-producing countries such as Saudi Arabia during the oil crisis in the 1970s to ensure that oil trade was settled in US dollars, thus forming the "petro-dollar" mechanism. This mechanism effectively supported the dominant position of the US dollar in international trade and reserves, and is regarded as the second stage of the Bretton Woods system.
Today, the United States is facing a huge fiscal deficit and a rising national debt, which has caused widespread concerns about the long-term stability of the US dollar and the sustainability of the "petrodollar" mechanism. The United States is seeking to establish a "stablecoin-dollar" to anchor the liquidity of the US dollar to continue the Bretton Woods system.
For the role and influence of stablecoins in international finance, Zhu Guangyao analyzed the global macroeconomic data and stablecoin transaction data.
Zhu Guangyao pointed out that the study of the impact and role of stablecoins on the international economic and financial order should be placed under the overall framework of the world's political and economic structure, and should look at the current global economic scale, the development of major economies in the world, related trade conditions, and cross-border capital and overall international fund settlement conditions.
According to the data of the International Monetary Fund (IMF), the total nominal GDP of the world in 2024 will be 110.5 trillion US dollars. Among them, the United States is the world's largest economy with a total GDP of 29.18 trillion US dollars, and China's GDP ranks second in the world, at 18.75 trillion US dollars (China's official data is 134.91 trillion yuan), while no other economy outside China and the United States has reached a scale of 5 trillion US dollars. Germany ranks third with a GDP of 4.66 trillion US dollars, Japan ranks fourth with 4.03 trillion US dollars, and India ranks fifth with 3.91 trillion US dollars.
In 2024, the total world trade in goods (including trade in goods within the European Union) will be 49 trillion US dollars, and the total trade in services will be 16 trillion US dollars, totaling 65 trillion US dollars. In the field of goods trade, China is the world's largest country in goods trade, with a total import and export volume of 6.17 trillion US dollars, of which exports are 3.58 trillion US dollars and imports are 2.59 trillion US dollars; the United States ranks second, with a total import and export volume of 5.43 trillion US dollars, of which exports are 2.07 trillion US dollars and imports are 3.36 trillion US dollars. In the field of services trade, the United States is the world's largest country in services trade, with a total import and export volume of 1.87 trillion US dollars, of which exports are 1.08 trillion US dollars and imports are 79 trillion US dollars; China's total import and export volume of services trade is 1.05 trillion US dollars, of which exports are 44 trillion US dollars and imports are 61 trillion US dollars.
Data released by the Society for Worldwide Interbank Financial Telecommunication (Swift) on June 19 showed that in the global payment currency rankings in May 2025, the US dollar topped the list with a share of 48.46%, followed by the euro with 23.56%, while the RMB payment share dropped sharply to 2.89% (previous value was 3.5%), falling to sixth place in the world (one of the reasons is that China has other settlement methods).
On June 18, Pan Gongsheng, governor of the People's Bank of China, introduced at the 2025 Lujiazui Forum that the RMB has become the world's second largest trade financing currency; calculated on a full-caliber basis, the RMB has become the world's third largest payment currency; and its weight in the Special Drawing Rights (SDR) currency basket of the International Monetary Fund (IMF) ranks third in the world.
The Bank for International Settlements (BIS) 2024 report estimates that the global cross-border payment market will exceed US$250 trillion. According to Deutsche Bank data, the total transfer volume of stablecoins in 2024 will reach 27.6 trillion US dollars, exceeding the total transaction volume of traditional payment giants Visa and Mastercard.
Zhu Guangyao pointed out that through the above total data, an analytical framework for the impact of stablecoins on the world economic system and the global financial landscape can be established. The United States aims to maintain the hegemony of the US dollar through stablecoins and strengthen its long-arm jurisdiction.
On June 17, local time, the U.S. Senate passed the "Guidance and Establishment of the National Innovation Act for Stablecoins in the United States" (referred to as the "Genius Act"), which aims to establish a regulatory framework for stablecoins. Zhu Guangyao believes that the continuous changes in four aspects of U.S. policies since June should be highly valued and analyzed.
The current U.S. national debt faces great challenges, and the credit of the U.S. dollar has also been impacted.
According to the data of the U.S. Treasury Department, as of May 2025, the total U.S. federal debt exceeded 36.2 trillion U.S. dollars, accounting for 123% of GDP, a record high. In addition, in 2024, the interest expenditure of the U.S. federal debt reached 1.1 trillion U.S. dollars, and the interest cost accounted for 3.93% of GDP, a record high since the 21st century, and higher than the U.S. military expenditure in 2024 (997 billion U.S. dollars).
Ray Dalio, founder of Bridgewater Fund, analyzed that if the proportion of national debt to GDP exceeds 135%, the national finance will face collapse. American historians have also publicly admitted that looking back at world history, if any empire's national debt interest expenditure exceeds military expenditure, then this empire cannot be maintained.
Faced with the above situation, the U.S. government has taken many measures.
First, on June 3 and 10, the Fed repurchased treasury bonds twice, with each repurchase amount of US$10 billion. The largest repurchase before that took place in 2000, with a repurchase amount of about US$3 billion. This is a direct measure taken by the US Treasury to maintain the stability of US debt.
Due to concerns about inflation uncertainty, the Federal Reserve maintained the benchmark interest rate in the range of 4.25%-4.5%, which Trump was very dissatisfied with. In his view, "the Federal Reserve's interest rate is at least 3 percentage points higher, which is causing the United States to pay an additional US$900 billion in refinancing costs each year." Of course, the Federal Reserve also made some concessions to the Trump administration. The Federal Reserve began to slow down the pace of balance sheet reduction in April this year, reducing the monthly redemption limit of treasury bonds from US$25 billion to US$5 billion to slow the decline in its treasury bond holdings.
Secondly, the US regulatory policy has been adjusted. Under the strong promotion of the US Treasury Department, the Federal Reserve Board of Governors passed a proposal to adjust the enhanced supplementary leverage ratio (eSLR) standard at a ratio of 5:2 on June 25. The eSLR dropped by about 1.4 percentage points, from the current 5-6% to about 3.5-4.5%.
The supplementary leverage ratio is an important indicator to measure the capital adequacy of banks. It is calculated by dividing the risk exposure of the bank's total assets by the Tier 1 capital. The Tier 1 capital here mainly refers to the bank's own capital plus profits, while the total asset risk exposure covers all items on the bank's asset side, whether it is a loan or other form, including government bonds and bank deposit reserves at the Federal Reserve. This regulatory framework originated from the Basel III agreement after the 2008 financial crisis, which aims to strengthen the supervision of large banks, especially major banks with systemic risks that are considered "too big to fail".
Basel III stipulates that the leverage ratio of large commercial banks (generally banks with assets of more than US$250 billion) shall not be less than 3%. This is to ensure that banks have sufficient capital to absorb potential losses and enhance the robustness of banks. For those global systemically important banks (G-SIBs) with systemic influence, a higher enhanced supplementary leverage ratio (eSLR) requirement of 5% shall apply, such as JPMorgan Chase, Goldman Sachs and other institutions. The eSLR requirement means that these banks need to hold and freeze a considerable amount of capital.
During the 2020 epidemic, the Federal Reserve temporarily adjusted the SLR rules to exclude US government bonds and bank reserves deposited at the Federal Reserve from the denominator (i.e., total risk exposure) of the SLR calculation. This temporary measure ended one year after its implementation as the epidemic situation eased. The core content of the Federal Reserve's adjustment of regulatory policies this time is to remove banks' holdings of US Treasury bonds and their reserve deposits at the Federal Reserve from the denominator of the SLR calculation. It is estimated that this move is expected to release as much as $900 billion to $1 trillion in Treasury bonds held by banks, which is quite significant.
This adjustment belongs to the scope of regulatory policy rather than monetary policy, but its effective implementation requires the coordination of the Federal Reserve and other regulatory agencies such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The approval of the Federal Reserve Board was achieved under great pressure from the US Treasury. This represents an important shift in the current regulatory policy thinking.
Furthermore, the US Treasury is considering a major adjustment to the valuation of gold reserve assets on its balance sheet. The United States has more than 8,300 tons of gold reserves, but since 1974, the value of this batch of gold has been fixed at $11 billion, both on the asset side of the Treasury balance sheet and on the liability side of the Federal Reserve balance sheet. This valuation basis is based on the gold price of $42.22 per ounce set in 1974, and although the market gold price has risen sharply since then, the book value has never been adjusted. For a long time, this has been mainly regarded as a specific accounting treatment.
The current trend shows that the US government may intend to change this practice. The core is that if the gold reserves are revalued at the current market price, the book value will generate huge value-added, which is estimated to be as high as 900 billion to 1 trillion US dollars. This "book profit" generated by the revaluation has potential strategic significance and may provide a huge pool of funds for specific policy goals (such as building a stable currency system).
Zhu Guangyao said that this discussion on the adjustment of gold pricing, together with the recent (June) modification of the SLR rule by the Federal Reserve, reflects that the US financial authorities are conducting a series of important policy reviews. Regardless of how market participants evaluate these measures, it is an indisputable fact that these recent actions, including gold pricing adjustments, SLR modifications and previously discussed policies, should be regarded more as strategic adjustment measures.
Finally, on June 17, the US Senate passed the stable currency regulatory framework "Genius Act". The bill imposes extremely strict restrictions on stablecoins anchored to the US dollar (such as Tether). The core requirement is that for every $100 worth of US dollar stablecoin issued, the equivalent of $100 of highly liquid US dollar assets must be held as support. The bill clearly defines such assets: limited to US dollar cash, US dollar deposits, and US Treasury bonds with a remaining maturity of less than or equal to 93 days. This means that even for long-term Treasury bonds, only the part that is about to mature within 93 days can be recognized as "sufficiently liquid" assets. At the same time, the issuer must be strictly regulated by federal or state regulators in the United States and disclose complete financial information on a monthly basis as required by the regulator.
This is essentially a stronger regulatory extension than the existing long-arm jurisdiction of the US dollar. The bill sends a clear signal that even if the current major stablecoin issuers such as Tether are headquartered overseas, they will have only two choices after the transition period specified in the bill ends - either move their business back to the United States for supervision or give up the peg to the US dollar. Its core purpose is to ensure that the US dollar stablecoin system is firmly within the US regulatory framework.
According to the calculation of US financial institutions, according to this requirement, for every unit of US dollar stablecoin issued, theoretically 0.95 US dollars will be used to purchase US Treasury bonds. Regardless of whether this calculation is absolutely accurate, the strategic intention behind the bill is very clear: to force the binding of US dollar stablecoins and US Treasury bonds through legislation to form a capital repatriation mechanism.
The final acceptance of this strongly regulated stablecoin form by the financial market is an inevitable result of the development of the scientific and technological revolution. Although blockchain and distributed accounting technology have the characteristics of "decentralization", stablecoins based on legal currency (especially the US dollar) are essentially "strongly centralized". It uses technological change as a means to serve the regulatory needs of the state regime. The US legislation this time clearly points to stablecoins pegged to the US dollar (as opposed to those pegged to virtual assets or algorithms), which marks a key victory for the state regime in using new technologies to strengthen centralized management. It is a typical case of "decentralization" serving "strong centralization". It can be said that this represents that the Bretton Woods system has entered a new stage in maintaining the hegemony of the US dollar.
American strategists have a clear understanding of this, and their intention to maintain hegemony is fully revealed in the statements of politicians: Trump said that the bill will make the United States "the undisputed global leader in digital assets"; US Vice President Vance sees the dollar stablecoin as a "multiplier of US economic strength" that can circulate the dollar more efficiently and at a lower cost through the blockchain payment system, consolidating its global dominance; US Treasury Secretary Benson emphasized that legislation will help "maintain and strengthen the dollar's reserve currency status" and "reduce government borrowing costs" and "effectively control national debt" by expanding the global use of the dollar.
Zhu Guangyao said that in the face of such a clear strategic layout by the United States, China has made great progress in responding to international financial challenges, such as rapid economic development, the world's largest trade in goods, rapid growth in trade in services, and continuous optimization of the settlement system. On this basis, we need to make greater efforts to promote high-level opening up and actively connect with high-standard international economic and trade rules, including how to adapt to the new situation and strengthen our position in international monetary settlement under the current situation of capital account management, and strengthen relevant international policy coordination. This is undoubtedly an urgent requirement for China's new strategy.
As for what strategy China should use to deal with the issue of stable currency, Zhu Guangyao believes that it can be promoted from three aspects.
First, we should make full use of the pilot of the offshore market of the Hong Kong Special Administrative Region. The Hong Kong Stable Currency Ordinance will officially come into effect on August 1 this year. As China's window to the outside world, Hong Kong provides a key platform for the implementation of relevant measures. We must fully affirm and give play to this role of Hong Kong, strengthen policy communication between the mainland and Hong Kong financial regulatory authorities, and firmly grasp this precious window opportunity.
Second, the core strategy of stable currency must revolve around the RMB. Whether it is offshore RMB or onshore RMB, it is necessary to promote the establishment of a stable currency pegged to the RMB. Although Hong Kong's stablecoin is naturally pegged to the Hong Kong dollar and indirectly to the US dollar based on its linked exchange rate system (the Hong Kong dollar is pegged to the US dollar in the range of 7.75-7.85), it is natural that its stablecoin is pegged to the Hong Kong dollar and indirectly to the US dollar. However, from the perspective of the country's overall strategic perspective, it is crucial to develop a stablecoin pegged to the RMB. While supporting the Hong Kong banking system, the RMB stablecoin must be incorporated into the upper-level design of the national financial strategy for overall planning.
Third, we must closely monitor the global use of stablecoins pegged to fiat currencies, especially in the following three aspects. First, we must closely monitor the implementation of the stablecoin bill once it becomes law on August 1 as Trump said; second, we must monitor the promotion of stablecoins pegged to fiat currencies in different regions and countries; and finally, we must observe the role played by national regimes, regulatory agencies, and commercial institutions in the issuance of stablecoins pegged to fiat currencies. For example, Tether cannot rule out the possibility of being incorporated by the United States in the future. But at this stage, stablecoins are issued by institutions. The United States has strict restrictions on this, prohibiting large technology companies from directly issuing stablecoins; if these technology companies want to participate, they must divest related businesses and establish specialized institutions. This involves the issue of business and information isolation (such as preventing data abuse). Therefore, while taking advantage of the convenience and innovation potential brought by high technology, it is also necessary to effectively control the risks that come with it, especially the issue of privacy protection, which requires careful study.
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