A recent UnHerd article warns of a “crypto time bomb,” suggesting that stablecoins could become a geopolitical tool to undermine the U.S. economy by redirecting foreign dollar reserves into U.S. Treasuries. The core assumption is that countries like Japan are sitting on idle piles of dollars, waiting for a stablecoin intermediary to put them to use.
This misreads how international finance operates. Like other major dollar holders, Japan doesn’t need help managing reserves. Dollars earned from trade surpluses are immediately reinvested, often into U.S. Treasuries. There are no dormant pools of dollars needing a middleman. The real action lies not in crypto or stablecoins but in how governments use their currency-issuing powers to actively manage currencies and reserves.
The Real Mechanism: Sovereign Wealth Funds
The real geopolitical financial weapon is the sovereign wealth fund (SWF), not digital tokens. Governments have long used SWFs and their variations to manage foreign exchange reserves, intervene in markets, and subtly manipulate currency values....
New Wayland
