Analyzing the Wall Street hot topic "Pennsylvania Plan": Can stablecoins tokenize US Treasuries and bring glory back to the US dollar?

Deutsche Bank strategists recently pointed out that the U.S. government seems to be adopting a new financial strategy called the "Pennsylvania Plan (Pennsylvania Plan)," attempting to break free from reliance on U.S. Treasury bonds for foreign capital and strengthen the dollar's strong position through dollar stablecoins and domestic incentive policies, which is expected to become a core economic weapon for Trump to save U.S. Treasury bonds.

Pennsylvania Project: The Starting Point of a Major Shift in U.S. Debt Strategy

A few days ago, George Saravelos, the head of foreign exchange research at Deutsche Bank AG, proposed the "Pennsylvania Plan" to address the dual pressures of the United States' long-standing fiscal deficit and current account deficit. Its name comes from the location of the U.S. Treasury, which is Pennsylvania Avenue in Washington.

As of July 2, 2025, the scale of the U.S. federal government debt has reached approximately $36.2 trillion. The Pennsylvania plan has recently garnered much discussion in foreign financial and media circles, seen as one of the "possible policy directions for Trump’s second term."

Compared to the previously controversial "Mar-a-Lago Accord (", the former focuses on moderate and feasible market-oriented measures, attempting to achieve the "de-foreignization" of U.S. debt through financial products or incentives such as USD stablecoins, regulatory relaxation, and tax incentives, thereby transferring the debt back to be absorbed domestically in the United States.

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Deutsche Bank analysis pointed out that the U.S. economy is facing macro constraints: "external deficit, net foreign assets )NIIP( negative ) external liabilities (, government inability to cut spending." In the absence of effective traditional means, the only option is to seek new sustainable financing paths through a combination of financial technology and policies.

US Dollar Stablecoin Becomes America's "Digital Chip": Strengthening Demand for US Treasuries

The most关注部分 of this plan is to use the US dollar stablecoin as a starting point, allowing the US government to indirectly retain overseas funds that are currently disinterested or easily escape during fluctuations in the bond market.

Saravelos pointed out that the U.S. government could encourage or support the expansion of stablecoin issuers that use Treasury bonds as reserve assets, by holding short-term U.S. debt as reserve assets, to issue digital dollars that can circulate in the global market. This allows foreign capital to retain support for U.S. debt when investing or conducting financial operations through U.S. dollar stablecoins, creating a new channel for the U.S. to absorb debt.

In other words, the success of stablecoins will create a new global demand for the US dollar, causing foreign capital to shift from directly holding US Treasury bonds to indirectly holding them through stablecoins. On one hand, this strengthens the sale of US short-term debt, and on the other hand, it keeps the global currency market immersed in the tide of "digital dollars," allowing the hegemony of the US dollar to return to glory.

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Trump's economic policy reveals itself: internal debt digestion and synchronized policy implementation.

Many specific policies set forth by the Pennsylvania plan have recently come to light, including discussions between the U.S. Treasury and the Federal Reserve about easing the supplementary leverage ratio )SLR( regulatory restrictions, as well as signals released by Federal Reserve governors regarding potential interest rate cuts in the third quarter. These actions align with the strategies outlined in the plan, suggesting that the Trump administration does seem to be working on this calculation.

Saravelos also mentioned the following supporting measures in the plan:

Tax incentives: Tax exemptions or deductions are granted to long-term debt-holding institutions such as insurance companies and retirement funds ).

Issuing special government bonds: for example, ultra-long-term bonds with maturities of 50 to 100 years aimed at pension funds, floating rate bonds aimed at banks and funds, etc., to meet specific asset allocation needs.

Financial repression measures: When necessary, the government may legislate to compel specific institutions such as the insurance industry or pension funds to increase their allocation of U.S. Treasury securities.

In the United States, in the absence of willingness to improve the fiscal situation, the path with the least political and economic resistance is for the U.S. government to seek to obtain more fiscal funds through domestic investors, allowing domestic capital to replace foreign capital and building a more stable bond market structure.

Global Effects: Stablecoins Compress the Survival Space of Non-USD Currencies

Crypto KOL Vito pointed out that if the Pennsylvania plan succeeds, it will not only affect the domestic market in the United States but will also have an impact on the global financial order:

The US dollar stablecoin will erode other countries' efforts to internationalize their local fiat currencies, while the United States can benefit from the global "seigniorage" bonus. With stablecoins as a new vehicle, Americans can buy, buy, buy globally, absorbing global value assets.

In this way, the United States successfully achieves a higher efficiency in global economic control, while non-American nations face a more arduous battle for financial sovereignty.

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Pennsylvania plans to extend the dollar's lifespan

This new financial strategy related to stablecoins has provided the U.S. with a means for debt export, and it utilizes high liquidity to stimulate and strengthen the demand for the dollar. The Pennsylvania plan did not change the imbalance in the U.S. financial structure, but rather bought more time and leverage through blockchain technology and policy design.

This article analyzes the hotly debated "Pennsylvania Plan" on Wall Street: Can stablecoins replace U.S. Treasuries and bring glory back to the dollar? Originally appeared on Chain News ABMedia.