South Korea is currently negotiating tariffs and investment with the United States. It is reported that South Korea will invest $350 billion in the United States. Initially, it was considering forms of guarantees rather than cash, but the United States is demanding direct cash investment.
Investing $350 billion in the United States would require mobilizing a massive amount of funds, exceeding 80% of South Korea’s foreign exchange reserves. A significant portion of South Korea’s foreign exchange reserves are held in the form of US Treasury bonds.
If South Korea were to sell these bonds to raise cash and invest in the US, selling pressure would increase, driving up bond yields.
To issue a stablecoin, you must purchase short-term US Treasury bonds equivalent to the amount issued. This serves as collateral to maintain the stablecoin’s value. What if Korea invests $350 billion in the US, but instead of selling existing Treasury bonds and receiving cash, it converts them into USD1 stablecoins?
South Korea will no longer need to sell its US Treasury holdings. This allows it to execute its investments without putting selling pressure on the US bond market. Conversely, since additional US Treasury bonds will be purchased to issue the USD1 stablecoin, this could actually have a positive effect on the US bond market.
If South Korea were to invest $350 billion in USD1, USD1 would instantly become the world’s largest stablecoin.
South Korea, Since we’re going to have to invest anyway, let’s flip the switch to a USD1 stablecoin.
Please put pressure on Korea.