ME News reports that on September 7 (UTC+8), Professor Cui Wei from the Department of Economics at University College London recently stated at the Yangtze Business School’s “AI × New Finance” symposium that stablecoins are not merely simple payment tools, but a new form of currency integrating three roles: payments, fiscal financing, and decentralized finance. At first glance, stablecoins and DeFi lending built on them appear to divert bank deposits and loans, potentially replacing traditional banking functions. However, stablecoin issuance requires U.S. Treasury bills as reserves, directly generating demand for U.S. debt and helping to alleviate the U.S. government’s financing pressure and short-term debt rollover risks. Once fiscal pressure eases, the government gains room for tax cuts, stimulating the real economy and potentially increasing corporate demand for bank credit. Regarding optimal scale, Cui provided a clear quantitative assessment. He noted that the U.S. Treasury has set a target of expanding stablecoin circulation to $3 trillion by 2030—equivalent to 9% of U.S. GDP. However, his team’s modeling, incorporating risks of bank runs, fiscal balance, and welfare effects, concluded that the optimal scale is approximately $1 trillion, or 3% to 4% of GDP; exceeding this level would significantly reduce social welfare. “To reach the extreme scale of 9%, either stablecoins would need to penetrate everyday consumer payments (e.g., using them to buy bottled water), or nearly all holders would need to be foreigners using them solely for cross-border settlements—both scenarios are highly implausible.” Professor Cui believes stablecoins still have substantial growth potential but must be viewed rationally in light of their underlying fiscal motivations. He pointed out that U.S. tax revenue as a share of GDP stands at only 27%, far below Europe’s 45% to 50%, indicating significant remaining fiscal capacity and continued short-term credibility of U.S. Treasuries. A growth trajectory from $300 billion to $1 trillion (roughly 3 to 4 times) is feasible. However, he cautioned that the Trump administration’s strong push for stablecoins and its ban on central bank digital currencies are not primarily about protecting privacy, but rather about meeting fiscal needs—namely, financing government deficits at low cost. (Source: BlockBeats)
UCL Professor Cui Wei suggests an optimal stablecoin size of $1 trillion, or 3-4% of U.S. GDP.
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Summary
On September 7, UCL professor Cui Wei highlighted stablecoin regulation during a speech, suggesting that the optimal stablecoin size should reach $1 trillion, or 3–4% of U.S. GDP. Citing MetaEra, he noted that stablecoins integrate payment, fiscal financing, and DeFi functions. Cui emphasized that they alleviate fiscal pressure and support demand for U.S. Treasury securities. He warned that reaching 9% of GDP would require extreme conditions. His remarks link stablecoin growth to concerns surrounding Countering the Financing of Terrorism (CFT).
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