Economist: Japan's debt crisis risk may drive up demand for cryptocurrencies

Economist Robin Brooks analyzes Japan's debt-to-GDP ratio, which has reached approximately 240% and is exacerbated by inflation and rising bond yields. However, a US recession could provide a brief window of relief for Japan, lowering global bond yields and easing fiscal pressures. Brooks points out that Japan faces a dilemma: maintaining low interest rates could lead to further depreciation of the yen and uncontrolled inflation; allowing yields to rise further to stabilize the yen could jeopardize debt sustainability. This dilemma could prompt investors to turn to alternative financial instruments such as cryptocurrencies and stablecoins. Notably, Japanese startup JPYC plans to issue its first yen-pegged stablecoin this year.