Stablecoins are emerging as a fiscal weapon for the U.S., channeling offshore dollars and Global South savings back into Treasuries.
Tech platforms like WhatsApp could act as Trojan horses, embedding stablecoin wallets into daily life and shifting dollar power from states to individuals.
The mass adoption of dollar stablecoins may drive the next DeFi cycle, expanding liquidity and reinforcing digital dollar hegemony while raising systemic risks.
THE HIDDEN CHANNEL OF DIGITAL DOLLARS
In Buenos Aires, Argentina, exchange boards change numbers like thermometers. Over seven years, the peso has lost more than 90% of its value against the dollar, and triple-digit inflation has forced residents to shift savings into a more “stable” asset: the dollar stablecoin USDT. Taxi drivers accept QR codes, café staff receive payments in stablecoins, and freelancers pay rent with them. These tokens, starting from U.S. clearing banks and moving through OTC desks and crypto platforms, have become more reliable than local money.
What looks like a local hedge is part of a larger trend: the digital dollar is being re-internalized. Half a century ago, the Eurodollar market allowed dollars to circulate outside the U.S. and lubricate global trade. Today, stablecoins bring those offshore funds back on-chain, under U.S. oversight. Stablecoins work like hidden channels, redirecting dispersed flows back to the dam, raising controllability and giving the Treasury new tools to steer liquidity. For the U.S., this is not only a defense against “de-dollarization,” but also an active attempt to reshape global dollar power.
THE TREASURY’S CALCULUS AND THE BANKS’ DILEMMA
The mechanism of stablecoins is simple: issuers receive U.S. dollars, invest them in short-term Treasuries or regulated bank accounts, and issue tokens at a 1:1 ratio. On redemption, they sell bills or use reserves to return dollars, burning the tokens. This “narrow bank” model locks capital into Treasuries with little duration risk. For the Treasury, it becomes a stable “bond absorber”: when offshore and Global South savings enter through stablecoins, they turn into hard demand for short-term Treasuries, weakening the Federal Reserve’s monopoly over front-end pricing. In past crises, the Fed acted as backstop for offshore dollars—during 2008, foreign banks accessed hundreds of billions through swaps and emergency loans.
If future policy signals end such support, offshore holders will move funds into stablecoins for safety. Thus, stablecoins replace part of the Eurodollar’s function and become direct reservoirs for fiscal deficits. Yet side effects are clear. Stablecoins’ strict reserve rules mean almost all assets flow into Treasuries and cash, pulling deposits away from commercial banks. Fed studies show every $1 leaving deposits into stablecoins cuts bank lending by about $0.5, while adding only $0.3 of Treasury demand. The result: fiscal financing is easier, but credit to the real economy shrinks. The Treasury’s calculus is clever, but it may force banks to confront disintermediation sooner than expected.
THE TROJAN HORSE OF PLATFORMS AND THE SOVEREIGNTY DILEMMA
Redesigning the dollar’s reach needs more than rules; it needs distribution at scale. The answer lies in U.S. tech platforms. WhatsApp, with billions of users, already tested embedded stablecoin wallets in 2021. With policy backing, such wallets could let users send stablecoins as easily as messages. For a Filipino worker abroad, this bypasses slow remittance systems; for a Nigerian business owner, it enables cross-border e-commerce payments free from local currency volatility. Stablecoins thus become “shadow dollar accounts” for the Global South, expanding virally through platform networks. For central banks, this is alarming. Domestic monetary policy tools weaken: inflation taxes fail, capital controls become porous, and deposits leak. Regulators face hard choices: block apps and risk backlash, or accept dollarization in disguise.
The U.S. government knows this and uses tech firms as Trojan horses. If a country resists, sanctions or tariffs can follow. Stablecoins are not just payment tools; they are vectors of financial influence. They shift dollar dominance from inter-state settlements to everyday transactions in personal wallets. Sovereignty becomes awkward: governments may reject the dollar as “national money,” but cannot stop citizens from using it as “people’s money.” Once stablecoins become the factual standard, macro transmission paths change—capital controls look like sieves, reserve ratios like hollow commands, while fiscal deficits recycle abroad as dollar assets.
A NEW DEFI CYCLE AND THE DIGITAL HEGEMONY OF THE DOLLAR
With stablecoin circulation likely to surpass $10 trillion in coming years, their impact on crypto will be unprecedented. Stablecoins are not just payments but the base currency of DeFi. Once trillions in digital dollars flow on-chain, they will search for yield. DeFi protocols provide it: staking stablecoins, collateralized lending, liquidity provision, and derivatives funding fees. For households, this means dollar savings can finally earn returns outside banks; for platforms, it means surging liquidity and user growth. Some call this DeFi’s “dollarization moment.” But risks are large. A stablecoin run could trigger faster collapses than any bank crisis. Global expansion may amplify regulatory arbitrage, with money moving freely while oversight remains national.
Whether dollar stablecoins become seamless “bond proxies” depends on U.S. Treasury-tech alignment and on DeFi’s ability to mature in transparency, risk control, and governance. One point is certain: stablecoins are pushing dollar power to new levels. They anchor not only Washington’s deficits and Fed policies, but also payments in Buenos Aires streets, Manila markets, and Lagos smartphones. Dollar hegemony is no longer just a macro story—it is daily, micro, and digital. Stablecoins as fiscal weapons mark a redistribution of power that global finance must confront, a Pax Americana written not only in treaties and markets, but now also in code.
〈When Stablecoins Become a Fiscal Weapon: How the Power of the Dollar Is Redistributed〉這篇文章最早發佈於《CoinRank》。
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When Stablecoins Become a Fiscal Weapon: How the Power of the Dollar Is Redistributed
Stablecoins are emerging as a fiscal weapon for the U.S., channeling offshore dollars and Global South savings back into Treasuries.
Tech platforms like WhatsApp could act as Trojan horses, embedding stablecoin wallets into daily life and shifting dollar power from states to individuals.
The mass adoption of dollar stablecoins may drive the next DeFi cycle, expanding liquidity and reinforcing digital dollar hegemony while raising systemic risks.
THE HIDDEN CHANNEL OF DIGITAL DOLLARS
In Buenos Aires, Argentina, exchange boards change numbers like thermometers. Over seven years, the peso has lost more than 90% of its value against the dollar, and triple-digit inflation has forced residents to shift savings into a more “stable” asset: the dollar stablecoin USDT. Taxi drivers accept QR codes, café staff receive payments in stablecoins, and freelancers pay rent with them. These tokens, starting from U.S. clearing banks and moving through OTC desks and crypto platforms, have become more reliable than local money.
What looks like a local hedge is part of a larger trend: the digital dollar is being re-internalized. Half a century ago, the Eurodollar market allowed dollars to circulate outside the U.S. and lubricate global trade. Today, stablecoins bring those offshore funds back on-chain, under U.S. oversight. Stablecoins work like hidden channels, redirecting dispersed flows back to the dam, raising controllability and giving the Treasury new tools to steer liquidity. For the U.S., this is not only a defense against “de-dollarization,” but also an active attempt to reshape global dollar power.
THE TREASURY’S CALCULUS AND THE BANKS’ DILEMMA
The mechanism of stablecoins is simple: issuers receive U.S. dollars, invest them in short-term Treasuries or regulated bank accounts, and issue tokens at a 1:1 ratio. On redemption, they sell bills or use reserves to return dollars, burning the tokens. This “narrow bank” model locks capital into Treasuries with little duration risk. For the Treasury, it becomes a stable “bond absorber”: when offshore and Global South savings enter through stablecoins, they turn into hard demand for short-term Treasuries, weakening the Federal Reserve’s monopoly over front-end pricing. In past crises, the Fed acted as backstop for offshore dollars—during 2008, foreign banks accessed hundreds of billions through swaps and emergency loans.
If future policy signals end such support, offshore holders will move funds into stablecoins for safety. Thus, stablecoins replace part of the Eurodollar’s function and become direct reservoirs for fiscal deficits. Yet side effects are clear. Stablecoins’ strict reserve rules mean almost all assets flow into Treasuries and cash, pulling deposits away from commercial banks. Fed studies show every $1 leaving deposits into stablecoins cuts bank lending by about $0.5, while adding only $0.3 of Treasury demand. The result: fiscal financing is easier, but credit to the real economy shrinks. The Treasury’s calculus is clever, but it may force banks to confront disintermediation sooner than expected.
THE TROJAN HORSE OF PLATFORMS AND THE SOVEREIGNTY DILEMMA
Redesigning the dollar’s reach needs more than rules; it needs distribution at scale. The answer lies in U.S. tech platforms. WhatsApp, with billions of users, already tested embedded stablecoin wallets in 2021. With policy backing, such wallets could let users send stablecoins as easily as messages. For a Filipino worker abroad, this bypasses slow remittance systems; for a Nigerian business owner, it enables cross-border e-commerce payments free from local currency volatility. Stablecoins thus become “shadow dollar accounts” for the Global South, expanding virally through platform networks. For central banks, this is alarming. Domestic monetary policy tools weaken: inflation taxes fail, capital controls become porous, and deposits leak. Regulators face hard choices: block apps and risk backlash, or accept dollarization in disguise.
The U.S. government knows this and uses tech firms as Trojan horses. If a country resists, sanctions or tariffs can follow. Stablecoins are not just payment tools; they are vectors of financial influence. They shift dollar dominance from inter-state settlements to everyday transactions in personal wallets. Sovereignty becomes awkward: governments may reject the dollar as “national money,” but cannot stop citizens from using it as “people’s money.” Once stablecoins become the factual standard, macro transmission paths change—capital controls look like sieves, reserve ratios like hollow commands, while fiscal deficits recycle abroad as dollar assets.
A NEW DEFI CYCLE AND THE DIGITAL HEGEMONY OF THE DOLLAR
With stablecoin circulation likely to surpass $10 trillion in coming years, their impact on crypto will be unprecedented. Stablecoins are not just payments but the base currency of DeFi. Once trillions in digital dollars flow on-chain, they will search for yield. DeFi protocols provide it: staking stablecoins, collateralized lending, liquidity provision, and derivatives funding fees. For households, this means dollar savings can finally earn returns outside banks; for platforms, it means surging liquidity and user growth. Some call this DeFi’s “dollarization moment.” But risks are large. A stablecoin run could trigger faster collapses than any bank crisis. Global expansion may amplify regulatory arbitrage, with money moving freely while oversight remains national.
Whether dollar stablecoins become seamless “bond proxies” depends on U.S. Treasury-tech alignment and on DeFi’s ability to mature in transparency, risk control, and governance. One point is certain: stablecoins are pushing dollar power to new levels. They anchor not only Washington’s deficits and Fed policies, but also payments in Buenos Aires streets, Manila markets, and Lagos smartphones. Dollar hegemony is no longer just a macro story—it is daily, micro, and digital. Stablecoins as fiscal weapons mark a redistribution of power that global finance must confront, a Pax Americana written not only in treaties and markets, but now also in code.
〈When Stablecoins Become a Fiscal Weapon: How the Power of the Dollar Is Redistributed〉這篇文章最早發佈於《CoinRank》。