The Trump administration is weighing government-backed joint ventures with private companies to push dollar stablecoins into foreign markets, according to Bloomberg.
Officials have been open about why. Exporting dollar tokens means exporting demand for US government debt.
Research from one of the Federal Reserve’s own regional banks has already tested that claim. Whether it holds depends on whose money moves.
The Case Washington Is Making
The effort could involve the Treasury, the State Department and the US International Development Finance Corporation. It remains under consideration, with no formal programme announced.
The numbers behind the pitch are real. Deputy Treasury Secretary Francis Brooke says issuers “already own nearly $200 billion of Treasury bills and other close-to-maturity Treasury securities.” Dollar-pegged tokens make up roughly $311 billion of a $312.6 billion market, about 99.5% of it. The GENIUS Act requires reserves in cash and short-dated Treasuries, which turns every new token into a bid for government paper.
Treasury Secretary Scott Bessent said last July the law would “buttress the dollar’s status as the global reserve currency.”
What the Kansas City Fed Found
In August 2025, Stefan Jacewitz published an economic bulletin for the Federal Reserve Bank of Kansas City examining this directly. It is his research rather than Fed policy, and the conclusion is awkward.
Money moving from a US bank deposit into a stablecoin relocates Treasury demand more than it creates it. Banks hold around 8% of assets in Treasuries and roughly half in loans, while issuers must hold about half their reserves in Treasuries. Each dollar shifted therefore adds an estimated 30 cents of Treasury demand and removes about 50 cents of bank lending. From the roughly $250 billion market he was examining, growth to $900 billion would imply about $325 billion less credit.
Jacewitz put the limiting case bluntly. Should the sources of those funds “sell Treasuries at the same rate that stablecoin issuers purchase them, then a larger stablecoin market will have no net effect on Treasury demand at all.”
Which Is Why It Is Going Abroad
That critique is about domestic substitution. Money already inside the US financial system is, somewhere in the chain, already funding Treasuries.
Foreign savings are not. A euro, peso or naira deposit converted into a dollar stablecoin is new demand, because what it was sitting in held no US government debt.
The overseas route is the one version of this plan where the argument survives contact with the research, whether or not that is why it was chosen.
The Destinations Have Noticed
Christine Lagarde rejected euro stablecoins as a way to lift the euro’s standing at a Banco de España forum in May. “Once we separate those functions, the case for promoting euro-denominated stablecoins is far weaker than it appears,” she said, citing run risk and deposits draining from banks.
That second objection is the Kansas City mechanism, relocated. A US regional Fed and the ECB agree on what happens. They disagree about who absorbs it.
The strongest version of Washington’s plan needs other countries’ savings to move into dollars. Those countries get a say in that.
