GENIUS Act and Dollarization (Parts of this are generated using AI) 1. Dollar Stablecoins as a Tool of Global Dollarization •Stablecoins like USDC and USDT are already popular as de facto dollars in many parts of the developing world, especially in countries with: •Weak local currencies •High inflation •Limited access to USD through banks With regulatory clarity in the U.S., trust and adoption of dollar stablecoins will skyrocket, especially in the Global South and among crypto-native economies. 2. Capital Drain from Smaller Economies •Citizens and businesses in weaker economies may move savings from local banks into dollar stablecoins. •This “digital dollarization” could: •Undermine monetary sovereignty •Accelerate capital flight •Reduce local credit creation •Result: A net outflow of capital from fragile economies into dollar-based rails. 3. Benefit to the U.S.: Exporting the Dollar Digitally •The more the world adopts dollar stablecoins: •The higher the global demand for U.S. Treasuries (since issuers like Circle need to hold high-quality dollar assets). •This lowers borrowing costs and supports deficit financing. •It creates a feedback loop: •More global demand → More stablecoin issuance → More Treasury demand → More room for U.S. deficits. 4. Geopolitical Implication: A New Bretton Woods Moment •In some ways, this mirrors the original Bretton Woods dollar supremacy, but this time through programmable digital money. •CBDCs from China or BRICS alternatives could try to push back, but stablecoins have the network effect and are already integrated into global crypto finance. What This Means Long-Term: •The U.S. could become more powerful financially even as its internal economy runs huge deficits. •Meanwhile, countries without capital controls or strong local currencies may lose control over monetary policy.