In an opinion article published in the Wall Street Journal, Paul Ryan urged US lawmakers to promote dollar-backed stablecoin, emphasizing how this could strengthen the economic position of the United States internationally, especially in response to the growing economic influence of China.
The Chinese economic threat and the solution with Paul Ryan’s stablecoins
China has made significant progress in the field of digital currencies. The project of the Chinese central bank’s digital currency (Digital Currency Electronic Payment – DCEP), known as the digital yuan, has raised concerns worldwide. The rapid adoption of this currency could give China a strategic advantage in international transactions, reducing dependence on the US dollar and, consequently, influencing the global economic power of the United States.
Stablecoins are cryptocurrencies designed to have a stable value, often pegged to a fiat currency like the dollar. According to Paul Ryan, the adoption and promotion of dollar-backed stablecoins could be an effective response to maintain and enhance the dollar’s hegemony in international markets.
Ryan argues that stablecoins offer numerous advantages. Firstly, they can reduce transaction costs and increase the speed of international payments. This would make U.S. debt more attractive to foreign investors, improving market liquidity and enhancing economic stability.
One of the central points of Ryan’s argument is that dollar-backed stablecoins can increase confidence in US debt. Currently, US debt is one of the safest and most sought-after resources in the global market. However, with the emergence of new technologies and digital currencies, this position could be threatened.
The stablecoin, thanks to their stable nature and the guarantee of the dollar, could strengthen the perception of security and reliability of the US debt. International investors would be more inclined to maintain and increase their positions in US government securities, knowing that these are supported by a stable and globally accepted digital currency.
A clear regulatory framework
For stablecoins to play the role proposed by Ryan, a clear and favorable regulatory framework is necessary. The United States must define precise rules for the issuance and use of stablecoins, ensuring transparency and security for users. Additionally, effective regulation can prevent abuses and risks associated with cryptocurrencies, while protecting the national financial system.
Ryan invites legislators to collaborate with experts in the technological and financial sectors to develop regulations that foster innovation without compromising economic stability. Only through a balanced and forward-looking approach can the United States take advantage of the potential of stablecoin.
Ryan’s proposal represents a challenge but also a historic opportunity for the United States. Adopting and promoting stablecoins is not just a matter of economic competition with China, but also of global technological and financial leadership. The United States has the opportunity to lead the future of digital transactions, setting standards that other countries might follow.
Conclusions
The invitation of Paul Ryan to combat the growing economic influence of China through the adoption of dollar-backed stablecoins is a bold but necessary strategy.Â
In a world that is increasingly digitalized, where digital currencies are becoming a concrete reality, the United States must adapt and innovate to maintain their position of global economic leadership. Promoting stablecoin can make U.S. debt more attractive, strengthen international confidence in the dollar, and ensure that the United States remains at the center of the global financial system.