The U.S. Treasury believes that stablecoins are increasing the demand for short-term government bonds, particularly Treasury bills (T-bills).
The records from October 29 indicate that the interest in T-bills is increasing in tandem with the growth of crypto-backed stablecoins. The potential of tokenizing Treasury assets on a blockchain, potentially a permissioned blockchain specifically for T-bills, was the subject of discussion among meeting attendees.
Several prominent Treasury and Federal Reserve officials were present at this confidential session, which was conducted by the U.S. Treasury’s Borrowing Advisory Committee.
Heather Masciotti of Citigroup, as well as officials such as Nellie Liang, Under Secretary for Domestic Finance; Fiscal Assistant Secretary David Lebryk; Josh Frost, Assistant Secretary for Financial Markets; and Brian Smith, Deputy Assistant Secretary for Federal Finance, comprised the Committee, which gathered at 9:00 a.m.
Important individuals from the Federal Reserve Bank of New York, including Ellen Correia Golay, Oliver Giannotti, and Kyle Watson, were present, as well as Debt Management executives Fred Pietrangeli and Tom Katzenbach. Other federal representatives and U.S. Treasury staff members attended the meeting in an overwhelming number.
Director Fred Pietrangeli initiated the evaluation by providing the fiscal year 2024 data. Treasury receipts increased by $479 billion or 11% from the previous year, reaching $4.92 trillion. This increase was the result of the new Corporate Alternative Minimum Tax (CAMT), federal deadline extensions from fiscal year 2023 to 2024, and job growth across the board. Additionally, there were increases in non-withheld and corporate taxes.
Concurrently, outlays increased by 10% to $6.75 trillion, primarily due to cost-of-living adjustments to Social Security and other transfer payments, as well as increased interest payments on public debt.
Pietrangeli addressed the borrowing requirements for the fiscal years 2025 and 2026 in terms of projections. Primary dealer projections indicate that the median borrowing for the next two years is approximately $128 billion higher than anticipated.
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