Stablecoins are being advertised as increasing the demand for high-quality assets. Some even suggest they may solve governments’ debt problems by producing an increased demand for Treasury securities. US Treasury Secretary Scott Bessent said: ‘A thriving stablecoin ecosystem will drive demand from the private sector for US Treasuries, which back stablecoins. This newfound demand could lower government borrowing costs and help rein in the national debt.’ This view rests on the strong assumption that stablecoins can increase the net demand for Treasury securities. While this is possible, it is not assured, and under ... (full story)