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].