Concerns Over Digital Currencies
At the recent 2025 China International Issues Forum held on June 26, Zhu Guangyao, a former vice minister of finance, expressed concerns about the role that digital currencies, particularly stablecoins, are playing in shaping the global financial order. He argued that the U.S. is attempting to initiate a new phase of the Bretton Woods system by endorsing stablecoins to reinforce the dominance of the dollar in the global economy.
Challenges to the Bretton Woods System
Zhu pointed out that the traditional Bretton Woods system, which ties the dollar to oil, is increasingly untenable amid rising national debt pressures confronting the United States.
U.S. Fiscal Measures
To address these challenges, the U.S. government has recently implemented several fiscal measures. These include:
- A significant purchase of Treasury bonds by the Department of Finance aimed at alleviating financial strain.
- A relaxation of banking regulations by the Federal Reserve concerning banks’ holdings of U.S. Treasuries, thereby injecting substantial liquidity into the system.
- Adjustments to the valuation of its gold reserves, which could release considerable ‘book value’.
Legislative Developments
Moreover, Zhu highlighted the passage of the Stablecoin Bill by the U.S. Senate, with key political figures, including Trump, advocating for dollar-pegged stablecoins to enhance the dollar’s global reach and minimize federal borrowing costs. However, he cautioned that these stablecoins will be tightly controlled financial instruments tied at a one-to-one ratio to dollar assets, rather than truly decentralized entities.
Global Implications
Zhu urged nations worldwide to remain vigilant to these developments and prepare to counteract the potential repercussions for the global monetary system.
