Core Viewpoint - The U.S. Treasury market is facing structural issues, including rising debt levels, declining liquidity, and increasing volatility, which are undermining the credibility of the international monetary system. The U.S. political landscape complicates the resolution of these risks, leading to a search for systemic solutions globally, particularly from countries like China [2][4][5]. Group 1: U.S. Debt and International Monetary System - The U.S. federal government debt has surpassed $36 trillion, exceeding 123% of GDP, with interest payments projected at $468 billion for the first five months of 2025, a 6.5% increase year-on-year, constituting 18% of fiscal revenue [4][9]. - The weakening of the U.S. Treasury's risk-free status and the declining dollar index are evident as the U.S. continues to face rising budget deficits and a downgraded sovereign credit rating [4][5]. - The shift towards gold as a reserve asset is notable, with its share in global official reserves nearing 20% by the end of 2024, indicating a return to commodity credit from sovereign credit [4][9]. Group 2: Fragmentation of International Governance - U.S. protectionist policies are fragmenting the post-World War II order, leading to a trust crisis in international governance and complicating global cooperation [5][6]. - The U.S. has not reduced its fiscal deficits but has instead expanded them through recent legislation, which may further erode the dollar's credibility [5][6]. - Countries are increasingly diversifying their reserves and engaging in bilateral currency settlements to reduce reliance on the dollar due to the fragmentation of international governance [5][6]. Group 3: Digital Technology and Monetary System Reconstruction - Digital technologies, including blockchain, are creating new credit support for the international monetary system, potentially alleviating the "Triffin dilemma" [6][9]. - The efficiency of international payment systems is expected to improve significantly due to advancements in digital technology, enhancing liquidity supply without increasing the base money supply [6][9]. Group 4: Emergence of a Multi-Currency System - The global economic landscape is shifting towards a multi-currency system, with regional trade integration enhancing the transactional role of non-dollar currencies [7][8]. - The share of the dollar in global reserves is projected to drop to 57.8% by 2024, the lowest in nearly 30 years, as other currencies and gold gain prominence [9][10]. - The evolution towards a multi-polar currency system is seen as a means to enhance financial stability and provide emerging economies with more options for reserve asset diversification [10][11]. Group 5: Recommendations for China - China is advised to deepen its financial market openness and promote the internationalization of the renminbi, including enhancing the renminbi bond market and diversifying foreign exchange reserves [14][25]. - The establishment of a more diversified and digitalized cross-border payment system is recommended, leveraging stablecoins and digital currencies to improve efficiency [15][26]. - Strengthening regional currency alliances and enhancing cooperation in monetary policy are suggested to support the renminbi's role in the international monetary system [16][27].

Group 1 - China's renewed interest in stablecoins is driven by concerns over US legislation that may enhance the dominance of the dollar [1] - The US Senate's passage of the GENIUS Act could transform dollar-pegged stablecoins into synthetic dollars, reinforcing their connection to global payment networks [1][2] - The rise of stablecoins is seen as an extension of existing currencies rather than a challenge to the dollar's dominance, expanding its influence into cryptocurrency and emerging markets [1] Group 2 - The People's Bank of China (PBOC) has shifted its stance from banning to planning for stablecoins and digital currencies, aiming to develop a multipolar international monetary system [2] - The digital yuan and stablecoins are proposed as viable alternatives for cross-border settlements, addressing inefficiencies in traditional payment systems [2] - The future of the renminbi stablecoin is constrained by domestic usage bans, capital controls, and the dominance of dollar-pegged stablecoins [2] Group 3 - Hong Kong has become the first jurisdiction to legislate stablecoins, requiring 100% backing by high-quality reserves to establish a 1:1 redemption mechanism [3] - The introduction of offshore renminbi stablecoins in Hong Kong aims to validate cross-border settlement applications while avoiding capital control violations [3] - Stablecoins are viewed as tools to enhance existing monetary frameworks rather than creating a new supranational currency system [3] Group 4 - Despite efforts to build cross-border settlement infrastructure, the internationalization of the renminbi has faced setbacks, with its global reserve currency share declining from 2.8% to 2.0% [4] - Restoring global confidence in China's growth potential is crucial for increasing the renminbi's usage, necessitating structural reforms to shift the economy towards consumption [4] - Achieving renminbi internationalization is expected to be a long and challenging process, requiring careful implementation of reforms [4]

Group 1 - The current international economic and trade order is under pressure, leading to discussions on reshaping a multipolar international monetary system to maintain global economic and financial stability at the 2025 Lujiazui Forum [1] - A multipolar monetary system can alleviate structural weaknesses in the global financial system and provide fairer financial choices for developing countries [1][2] - The dominance of the dollar in financial globalization has increased global economic vulnerability and external imbalances, highlighting the need for a multipolar monetary system to mitigate risks and enhance resilience [1][2] Group 2 - A multipolar international monetary system can distribute the pressure of international liquidity supply, reducing the burden on a single reserve currency country [2] - Key strategies for reshaping a resilient multipolar monetary system include promoting various currency payment systems, enhancing regional financial cooperation, and improving global financial governance [2] - The development of digital technologies such as smart contracts and decentralized finance can reshape payment infrastructure and diversify settlement methods, challenging the traditional use of cross-border payment systems as unilateral sanction tools [2] Group 3 - The future international monetary system may evolve towards a landscape of several sovereign currencies coexisting, competing, and balancing each other [3] - Sovereign currency countries must take on corresponding responsibilities, strengthen domestic fiscal discipline, and promote structural economic reforms [3]

Core Viewpoint - The evolution of the international monetary system reflects profound changes in the global landscape and national competitiveness, with increasing discussions on reforming the monetary system driven by geopolitical factors rather than solely economic ones [1][2]. Group 1: Historical Context and Current Trends - The international monetary system has evolved over the past 20 years, characterized by the emergence of the euro in 1999, which currently accounts for approximately 20% of global foreign exchange reserves, second only to the US dollar [2]. - The international status of the renminbi has steadily risen since the 2008 financial crisis, becoming the second-largest trade financing currency globally and the third-largest payment currency, as well as holding the third-largest weight in the IMF's Special Drawing Rights (SDR) basket [2]. Group 2: Future Directions of the International Monetary System - The future of the international monetary system may trend towards a coexistence of a few sovereign currencies that compete and balance each other, necessitating sovereign currency countries to enhance domestic fiscal discipline and financial regulation [2]. - The SDR is theoretically positioned to address the inherent issues of a single sovereign currency as the international dominant currency, offering greater stability and the ability to better serve global public goods, but it faces challenges in achieving international consensus and market depth [3]. Group 3: Mechanisms for SDR Utilization - There is a need to optimize the mechanisms for SDR distribution and issuance, with a proposal to increase regular SDR issuance and expand its scale, moving beyond the current practice of one-time large issuances primarily for crisis response [3]. - Encouraging private sector participation in the use of SDR in international trade and investment activities, including the issuance of SDR-denominated bonds, is essential to enhance the role of SDR as a reserve asset and establish a settlement mechanism suitable for large-scale use [3].