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

According to Coinjie.com, economist Robin Brooks analyzed that Japan is facing a potential debt crisis, with its debt-to-GDP ratio reaching about 240%, and inflation and rising bond yields have further exacerbated the crisis. However, the U.S. recession could provide Japan with a brief respite, lowering global bond yields and easing fiscal pressures. Brooks pointed out that Japan is currently facing a dilemma: maintaining low interest rates may lead to further depreciation of the yen and hyperinflation; allowing further yields to stabilize the yen may endanger debt sustainability. This dilemma could prompt investors to turn to alternative financial instruments such as cryptocurrencies and stablecoins. It is worth noting that Japanese startup JPYC plans to issue its first stablecoin pegged to the Japanese yen this year. In addition, the yen has depreciated by 41% since 2021, exacerbating domestic inflation pressures. Meanwhile, Japan's 10-year Treasury yield has risen from close to zero in 2020 to 1.60%, the highest since 2008, with the 30-year Treasury yield hitting decades highs, reflecting investors' concerns about fiscal risks. Brooks believes that the U.S. recession may temporarily lower Japan's bond yields, winning time for Japan. However, long-term solutions still require spending cuts or tax increases, but it remains uncertain whether the Japanese public will accept these measures.