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Forbes
3 days ago
- Business
- Forbes
Stablecoin Policy's Web Is Full Of Characters
There has been a web of intrigue playing out in the stablecoin policy sphere. The Senate Guiding and Establishing National Innovation for U.S. Stablecoins Act is back on track. Debate will continue when Congress returns from recess next week, and a vote is likely to follow posthaste. Just as the policy process has been dramatic, the stablecoin advocacy ecosystem has been full of theatrics. Agencies, banks, crypto companies, public institutions are among the cast of characters in the stablecoin mesh. A stablecoin, a digital dollar, is an instrument whose time has come. Previous proposals were far less innovative. For decades, plans to leverage the post office to provide access to bank services to the underserved floated across progressive circles in Washington. More recently, the 2023 launch of FedNow, an instant payments system built by the Federal Reserve, did not live up to expectations. The urgency to fill this gap has been mounting for a long time. Perhaps it was the obstacles the federal government faced as they tried to deliver stimulus checks to the most vulnerable during COVID that solidified stablecoins as a viable solution. Stablecoins do not represent a total disruption. The revenue model is essentially the same as traditional financial institutions. Companies invest their reserves and subsequently profit from the gains. Is that synergy a good thing? It depends on who you ask. The legacy banking system is entrenched and tensions are high in some corners. Independent Community Bankers of America President and CEO Rebeca Romero Rainey said this in a statement before the latest GENIUS Act vote. "ICBA urges the Senate to ensure the GENIUS Act provides regulatory clarity while including necessary guardrails to protect against the negative economic consequences that would result from community bank disintermediation. ICBA reiterates our concerns outlined for the Congress since the beginning of this debate. With community banks using deposits to make 60% of the nation's small-business loans and 80% of banking industry agricultural lending, mitigating the risk of retail deposits migrating out of community banks — which have proven commitments to their communities and local credit creation — is critical.' Big banks, however, want a piece of the pie. JPMorgan Chase, Bank of America, Citi, Wells Fargo, and others are exploring the possibility of creating a unified stablecoin according to news reports. There's also web spinning in the crypto native industry. After rumors spread recently that Coinbase and Ripple were vying to acquire Circle, the largest stablecoin company in the United States just squashed speculation by announcing their IPO will go live next week on June 4. Oversight of this messy web will rest in the purview of the Office of the Comptroller of the Currency. 'I'm also focused on expanding responsible bank activities involving digital assets to support the 50 million Americans who now hold some form of cryptocurrency. Regulated banks must keep up with this transformation,' Acting Comptroller Rodney E. Hood recently said in a speech this month. New OCC guidance states that 'crypto-asset custody, certain stablecoin activities, and participation in independent node verification networks such as distributed ledger are permissible for national banks and federal savings associations.' The stage is set for centralized and decentralized finance to fuel the sector. But will frictions fester? The stablecoin policy web is just commencing and will likely get more complex after legislation is signed into law.
Japan Times
21-05-2025
- Business
- Japan Times
China's building crash is rewinding 22 years of growth
Casting your mind back to the China of 2003 almost feels like an exercise in historical fiction. With an economy barely larger than Italy's, it was still underdeveloped and isolated. Plagued by power shortages, a delinquent banking system and SARS — the brief coronavirus epidemic that resembled a trial run for COVID-19 — there was still little outward sign of the coming boom. And yet the China of 2025 is oddly reminiscent of a generation ago. With a four-year real estate crash showing few signs of abating, construction of new housing is now back to the levels of the early 2000s. Just 132 million square meters of homes have been started in the four months through April, according to government data this week. That's less than a third of the level before the crash began in 2021 and the lowest total since 2003. For all that has been written on the financial impact of China's housing bubble bursting, that degree of slowdown suggests we may still be underplaying the scale of this reversal as a shift in economic activity — and, importantly, the carbon emissions that result from it. That's because the first commodity market to feel the impact of a slowdown in new home building is cement, one of the most polluting substances on Earth. It's essential as the binder that holds concrete together, so it's one of the first materials to be used when developers break ground at a new site. But it accounts for about 8% of the world's emissions and China's consumption alone comes to nearly 4% of all carbon pollution. Where housing starts go, cement quickly follows and that's what we're seeing right now. January-to-April cement output came to just 495 million metric tons, the lowest level since 2009. At that time, China was still filling in the details of what would soon become the biggest stimulus package in history. Those measures helped turn the country from a sweatshop for foreign manufacturers to a modern economy encrusted with brand new concrete infrastructure. We're now returning to those far-off pre-stimulus days. What does that mean for the global climate? Each metric ton of cement accounts for about 0.6 tons of carbon emissions, so the decline in annual output between 2021 and 2024 of roughly 550 million tons is already equivalent to reducing the emissions of the U.K. or Poland to zero. It would be unwise to assume this is a blip. Real estate declines can be persistent, thanks to the way they crystallize large-scale shifts in the demographic and financial makeup of the population. U.S. housing starts have never recovered to more than 80% of the peak they hit in 2005, while the U.K. is running at barely half the level it reached all the way back in 1988. There's good reason to think the same dynamic may be playing out in China. The great driver of the real estate boom was urbanization. The population of its cities has increased by more than half a billion people since the 1990s, as hundreds of millions moved from farms in search of work. Hundreds of millions more were born in urban hospitals. That has attenuated dramatically in recent years. You have to go back to the aftermath of the 1989 Tiananmen Square massacre to find a time when China's urban population grew as slowly. Last year, the increase was just 11 million — roughly half the rate that prevailed during the 2000s and 2010s and barely a third of the peak in 2011. Set against such a small increase in demand, China is still arguably building too many homes. At an average 40 square meters per person, you only needed about 433 million square meters to comfortably accommodate all the increase in urban population last year (considerably less, when you consider how many of the new urbanites were newborn babies). That's well short of the 537 million square meters of residential buildings that was completed. New home prices are still falling in all but two of the 70 biggest cities and prices for established dwellings are dropping in all of them, suggesting there's a clear oversupply. This tipping point can't come soon enough. The process of urbanization was historically one of humanity's dirtiest, as cement and steel were transformed into buildings linked together by gas-guzzling cars, railways and millions of miles of asphalt. Other urban booms may still come in India, Southeast Asia, Africa and elsewhere. But the end of China's world-changing period of epic growth will at least provide a breather for a planet that has nearly choked on its effects. David Fickling is a Bloomberg Opinion columnist covering climate change and energy.
