The debate over “dedollarization” has heated up again, as US law opens the door to USD-denominated stablecoins—a move that could strengthen the US dollar’s global position but also expose the risks of dependence on the currency.
According to Lianhe Zaobao, experts believe that the legalization of USD-denominated stablecoins increases the penetration of the USD, while the global trend of accepting cryptocurrencies and stablecoins accelerates the process of "dollarization".
- “Dedollarization” is a hot topic again in the context of digital finance and US policy.
- Laws allowing USD-pegged stablecoins could strengthen the USD's position globally.
- Increasing dollarization exposes dependence risks, requiring diversification and risk management.
Context: Why is “de-dollarization” being discussed again?
Direct answer: The debate arises due to the interaction between national policy, geopolitical pressures and advances in financial technology.
Analysis: The growth of cryptocurrencies, stablecoins and legislative decisions in the United States have raised questions about the long-term Vai of the USD. Some countries are looking for mechanisms to reduce dependence, while the digital financial market tends to facilitate the use of the USD.
The impact of US law on USD-denominated stablecoins
Direct answer: Legalizing USD-denominated stablecoins reduces transaction friction and strengthens the demand for USD in the global market.
Analysis: USD-backed stablecoins enable faster and cheaper cross-border payments, encouraging platforms and businesses to use digital USD. This results in increased USD penetration into the digital financial system, while also mitigating some of the risks associated with US sovereign debt.
The risks of over-reliance on the USD
Direct answer: Increased dollarization exposes systemic risks, from monetary policy implications to the possibility of economic sanctions.
Analysis: Heavy reliance on a single foreign currency makes economies vulnerable to changes in the issuing country’s monetary or geopolitical policies. Diversifying reserves, strengthening governance frameworks and developing domestic payment systems are therefore necessary.
What is dedollarization?
Dedollarization is the effort to reduce the share of USD used in international transactions, foreign exchange reserves and payment systems of a country or region.
What does US stablecoin law mean for the USD?
Legislation allowing USD-pegged stablecoins could increase global digital USD usage, cementing its Vai as a payment currency and store of value.
Can Cryptocurrency Replace USD?
Not yet; cryptocurrencies sometimes augment the USD's position thanks to USD-pegged stablecoins, and a complete replacement would require many far-reaching economic, legal, and technical changes.
