Bessent Is Deluded About Stablecoins Funding the Deficit
Even if demand for the tokens surges, it won’t magically produce dollars to buy more Treasuries.
Scott Bessent is deluding himself that stablecoins will help plug the US deficit by increasing demand for Treasuries.
Photographer: Michael Nagle/BloombergScott Bessent is wrong about a potential big new source of demand for US government debt — again. The Treasury Secretary expects stablecoins, the crypto tokens designed to keep a constant dollar value, to grow rapidly and gobble up huge volumes of public bonds. Both the explosion of issuance and the impact on Treasuries are overblown.
It’s the second time this year Bessent has gotten overexcited that rewriting financial rules will help meet the country’s vast and growing borrowing needs. In April, he said his loosening of constraints on the balance sheets of big banks would increase their appetite for holding Treasuries — but it will only help them trade bonds and lend more to hedge funds.