Stablecoin Legislation: Securing Dollar Dominance

U.S. Treasury Secretary Scott Bessent announced Wednesday that new legislation for stablecoins, which would be supported by U.S. Treasury debt, could enhance the dollar's status as the world's reserve currency. By establishing this framework, the demand for U.S. Treasuries could increase significantly—potentially adding $2 trillion in demand.

Speaking at a U.S. Senate Appropriations subcommittee, Bessent stressed the administration's commitment to cementing the dollar's preeminence globally. He expressed confidence that stablecoin legislation linked to U.S. Treasuries could broaden the use of the U.S. dollar worldwide and suggested this market could grow beyond the initial $2 trillion estimate.

The strategy is seen as a pivotal move to strengthen the financial ecosystem by using blockchain technology to underpin the already stable U.S. dollar, thus promoting its circulation through digital currencies globally.

(With inputs from agencies.)