Core Viewpoint - The rapid development of stablecoins may exacerbate the shortage of U.S. Treasury securities, impacting global financial stability, and China should promote its bonds as a global safe asset to enhance the international status of the Renminbi and facilitate its internationalization [1][2]. Group 1: Characteristics of Stablecoins - Stablecoins are designed to improve upon cryptocurrencies like Bitcoin, but they fail to meet the three essential characteristics of money: singularity, elasticity, and integrity [1][4][11]. - The singularity of stablecoins is compromised as users may question the actual status of the underlying collateral during transactions [12]. - Elasticity is lacking in stablecoins since they do not create new liquidity but rather depend on existing liquidity [12]. - The integrity of stablecoins is also in doubt, as they are often used for illegal activities, undermining their credibility as a monetary tool [12]. Group 2: Market Dynamics and Implications - The growth of stablecoins increases the demand for U.S. Treasury securities, which are already in short supply, leading to higher prices and potential financial instability [2][8]. - The situation mirrors historical banking failures due to the scarcity of underlying safe collateral, highlighting a modern version of the "Triffin Dilemma" where global demand for safe assets conflicts with the U.S.'s ability to provide them [2]. - The need for a global safe asset is pressing, and China is encouraged to position its bonds as such to alleviate the shortage and bolster the Renminbi's international role [2]. Group 3: Historical Context and Future Outlook - The emergence of stablecoins is a response to the inefficiencies of traditional financial systems, particularly in cross-border payments and serving unbanked populations [8]. - The operational mechanism of stablecoins is similar to money market funds, which promise 1:1 redemption based on underlying safe assets like U.S. Treasury securities [9]. - However, the stability of these assets is not guaranteed, as evidenced by the collapse of Silicon Valley Bank, which held significant amounts of U.S. Treasury securities but faced liquidity crises due to market volatility [10].

Core Viewpoint - Stablecoins have potential in tokenization but fail to meet the key standards of singleness, elasticity, and integrity, preventing them from becoming a pillar of the monetary system [1][2][6]. Group 1: Key Standards - **Singleness**: All currency units must have a unified value, but different stablecoins may not be exchangeable at a 1:1 ratio, leading to a lack of uniformity [3][9]. - **Elasticity**: Currency supply should flexibly expand or contract based on economic needs, but stablecoins require full collateralization, limiting their ability to create money like traditional banks [3][10]. - **Integrity**: The monetary system must prevent crime and maintain public trust, yet stablecoins lack adequate KYC mechanisms, raising concerns about their use in illegal activities [3][9]. Group 2: Current Monetary System - The existing dual-layer monetary system, centered around central banks, is deemed superior for ensuring currency applicability, despite having room for improvement [11][12]. - Central banks provide the highest form of currency, ensuring stability and credibility, while commercial banks support economic activities by providing payment means [11][12]. Group 3: Future of Monetary Systems - BIS acknowledges the transformative potential of tokenization, which could enhance the current system and pave the way for new arrangements in cross-border payments and securities markets [14][15]. - The concept of tokenization involves recording physical or financial assets on programmable platforms, integrating operations into a seamless process [15].