Former CEO of BitMEX Arthur Hayes discusses the risks associated with the rising US public debt and the potential of stablecoins as a liquidity source.
Risks of US Public Debt
Arthur Hayes asserts there is a significant risk in financing the growing public debt in the US. He mentions that the current bond market lacks sufficient buyers, as the US Treasury plans to sell nearly $5 trillion in bonds this year. According to Hayes, keeping 10-year bond yields below 5% could prove challenging.
Stablecoins and Their Liquidity Impact
Hayes believes bank-issued stablecoins could inject substantial liquidity into the bond market. He suggests that large traditional banks could bring idle deposits back into the economy by issuing stablecoins. Within this framework, he proposes that $6.8 trillion could potentially be reassigned to bonds.
Role of Banks in Utilizing Stablecoins
According to Hayes, stablecoins will primarily be utilized by banks based on regulatory arrangements. He emphasizes that the main objective is to introduce significant liquidity into the system to support the bond and capital markets. Hayes advises investors to consider investing in Bitcoin or shares of large banks instead of focusing on startups that issue stablecoins.
Amidst increasing public debt and a fragile global financial system, proposals for using bank-backed stablecoins are becoming relevant. Experts are closely monitoring how such models may function in the bond market and whether they can maintain financial stability.
