Economist: Japan's debt crisis worsens, investors turn to cryptocurrency for hedging
According to Coindesk, Japan is currently caught in a difficult policy dilemma. Maintaining low interest rates could lead to further depreciation of the yen and trigger uncontrollable inflation; whereas allowing yields to rise to stabilize the exchange rate could jeopardize debt sustainability.
Economist Robin Brooks analyzes that Japan's debt-to-GDP ratio has reached approximately 240%, and it faces severe economic downturn pressure due to inflation and rising government bond yields. This dilemma may prompt investors to seek alternative financial instruments such as cryptocurrencies and stablecoins.
Data shows that since 2021, the yen has depreciated by 41%, further exacerbating domestic inflationary pressures. At the same time, Japan's 10-year government bond yield has risen from near-zero levels in 2020 to 1.60%, reaching a new high since 2008, while the 30-year yield has also hit a multi-decade peak, reflecting investors' demands for higher premiums to compensate for the fiscal risks of government borrowing.
It is worth noting that Japan's startup JPYC plans to issue the first stablecoin pegged to the yen this year, which is also a response to the current economic situation.
Brooks believes that although the U.S. economy may fall into recession, temporarily lowering global bond yields, this also gives Japan some breathing room. However, for Japan to maintain long-term stable economic growth, it still needs to achieve fiscal sustainability through spending cuts or tax increases, although whether these measures will gain public support remains uncertain.
In summary, economists believe that the worsening of Japan's debt crisis is driving an increase in cryptocurrency demand, leading investors to increasingly consider digital currencies as alternatives to the traditional financial system. This trend reflects investors' heightened pursuit of asset safety and inflation resistance in the face of increasing global economic uncertainty.
Therefore, Japan's upcoming economic policies, especially how to balance low interest rates with debt sustainability, will become a key focus for investors. These factors may directly impact investment decisions and the stability of global financial markets.
