Hong Hao: The scale of stablecoins will soon exceed a trillion dollars

Hong Hao, a well-known economist, recently shared his latest views on the topic of "stablecoins: just a craze or a real game changer?" in an online conversation.
Hong believes that most stablecoins issued in Hong Kong will be based on Hong Kong dollars rather than US Treasuries. In addition, the Hong Kong Monetary Authority has very large foreign exchange reserves, so stablecoins in Hong Kong may be more stable than those in the United States. And the current stablecoin market is still very small, only 250 billion US dollars. He expects that with more and more participants joining, it will soon be well over a trillion US dollars. And in theory, the issuance of stablecoins will indeed increase demand for US Treasuries, because there are now multiple participants in the market who can issue stablecoins based on US Treasuries.
Mr. Hong predicted that real demand for Treasuries in the future would depend on the fiscal stability of the US government. In addition, he noted that stablecoins are one of the better ways to address the cost and speed of cross-border transactions in order to get foreign players to buy and sell more with China. But for Chinese regulators, stablecoins also mean the decentralization of the payment system, which could pose a challenge to the existing regulatory framework. But in any case, he said: "The boom of stablecoins has started, and the status of stablecoin technology in daily life will become more and more prominent, which will be a trend."