[The Risk of Japan's Debt Crisis Intensifies, Potentially Driving Increased Demand for Cryptocurrencies]
Economist Robin Brooks has warned that Japan's debt-to-GDP ratio has reached approximately 240%. Under the dual pressures of inflation and rising government bond yields, the risk of a debt crisis is further escalating. Since 2021, the Japanese yen has depreciated by 41%, and domestic inflationary pressures have risen significantly. Meanwhile, Japan's 10-year government bond yield has climbed to 1.60%, the highest since 2008, and the 30-year yield has reached multi-decade peaks, reflecting market concerns over fiscal risks.
Brooks pointed out that Japan faces a dilemma: maintaining low interest rates could lead to further yen depreciation and exacerbate inflation, while raising yields might jeopardize debt sustainability. This predicament could prompt investors to turn to alternative assets such as cryptocurrencies and stablecoins. Notably, Japanese startup JPYC plans to launch the first yen-pegged stablecoin this year, providing the market with a new hedging tool.
