The Trump administration is considering an initiative to promote dollar-backed stablecoins overseas as part of an effort to reinforce the US dollar’s position as the world’s reserve currency. The US government could support stablecoin projects through joint ventures with private-sector firms, involving several federal agencies including the Treasury Department, the State Department and the US International Development Finance Corporation (DFC). This initiative could boost demand for US Treasurys, as dollar-backed stablecoins commonly use these securities as reserve assets. China’s digital yuan, used in Project mBridge for cross-border CBDC transactions, and the European Central Bank’s 12-month digital euro pilot expected to begin in the second half of 2027, illustrate the international competition in digital payment infrastructure.
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