Economists: The risk of Japan's debt crisis may drive the demand for Crypto Assets to rise.

According to Mars Finance, economist Robin Brooks analyzed that Japan is facing a potential debt crisis, with its debt-to-GDP ratio reaching approximately 240%, further exacerbated by rising inflation and government bond yields. However, a recession in the United States could provide Japan with a brief window of relief, lowering global bond yields and easing fiscal pressure. Brooks pointed out that Japan is currently caught in a dilemma: maintaining low interest rates could lead to further depreciation of the yen and trigger uncontrollable inflation; allowing yields to rise further to stabilize the yen could jeopardize debt sustainability. This predicament may prompt investors to turn to alternative financial instruments such as crypto assets and stablecoins. Notably, Japanese startup JPYC plans to issue the first stablecoin pegged to the yen this year. Additionally, the yen has depreciated by 41% since 2021, intensifying domestic inflationary pressures. Meanwhile, Japan's 10-year government bond yield has risen from nearly zero in 2020 to 1.6%, a new high since 2008, and the 30-year yield has also reached a multi-decade high, reflecting investor concerns about fiscal risk. Brooks believes that a recession in the United States may temporarily lower Japan's bond yields, buying time for Japan. However, long-term solutions still need to be achieved through spending cuts or tax increases, but whether the Japanese public can accept these measures remains uncertain.