With the use of stablecoins growing rapidly for payments, cross-border transactions, and remittances, the global US dollar stablecoin market could grow significantly over the coming years.
This also means that US dollar stablecoins could be used more widely as a means of payment in Europe, Japan, Canada, Australia, and emerging markets.
As a result, the global growth in demand for stablecoins could become a significant new source of demand for short-term US government debt.
Academic papers find that large inflows into stablecoins lower three-month T-bill yields by 2 basis points within 10 days.
The bottom line is that stablecoin demand for T-bills could grow into trillions, and the likely result is a steeper curve with significant new demand in the front end.
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