US credit downgrade pushes up financing costs - weak dollar

The Thai Chamber of Commerce revealed that the United States has been downgraded from the highest level of Aaa to Aa1 after the public debt level dragged down the "US government bonds" - "the dollar" to lose credibility. It is expected to push up the cost of financing - borrowing of the government and private sectors in the United States. It sees G-Token as a government bond in the form of a token, not a cryptocurrency.

Mr. Anusorn Thamjai, Dean of the Faculty of Economics and Director of the Digital Economy, Investment and International Trade Research Center (DEIIT) University of the Thai Chamber of Commerce The United States has been downgraded from the highest level of Aaa to Aa1, with Moody's expecting that the US's financing and borrowing costs, both public and private, will increase, and that the credit rating and creditworthiness will not improve in the near future as the US needs time to resolve its massive public debt and ongoing large budget deficits.

The large budget deficit is the result of the Trump administration's tax breaks for businesses and investors. It is estimated that without fiscal reform and better management of the public debt, the US public debt-to-GDP ratio could reach 135% within the next decade.

Public debt at such a level will cause the “US Treasury Bonds” and the “dollar” to lose credibility. This will cause the dollar to continue to weaken in the long term. Its role as the main currency of the global financial system may change, so it is imperative that the US government urgently reforms the fiscal system to solve the budget deficit and excessive debt.

Mr. Anusorn said that G-Token is an alternative for government loans and public investment, but it is not money. It does not create new money supply. Therefore, it should not violate the Currency Act. It is just a government bond in the form of a digital token. G-Token is the application of technology to fiscal management. It is a tool for raising funds and borrowing money for the government so that the new generation who are familiar with technology can invest and save money through such tools.

G-Token is not a currency or a cryptocurrency. It is a financial asset for investment or speculation. At the same time, it is different from Utility Token that gives the holder the right to receive specific services or other rights. Issuing bonds in the form of digital tokens will help reduce long-term fundraising costs, increase liquidity in the secondary market, allow for any minimum investment, and have more transparency in various transactions. The Ministry of Finance must prepare the money to pay the full amount of principal and interest, which is Fully Backed.

However, what needs to be careful about is to carefully examine how much space the relevant laws allow for this, and to speed up the amendment of the Securities and Exchange Act of 2535 to support more comprehensive electronic transactions. In addition, the system and process for issuing and transacting G-Token must be as secure and stable as government bonds that are in the form of a physical certificate.

In addition, G-Token is a financial innovation, it is new, there may be a risk of liquidity in the secondary market if there is not enough trading because it is new, investors may not be familiar with it. Therefore, the government should have measures and mechanisms to increase liquidity to support this risk in the initial pilot project.

“Currently, there is a trend of Tokenization in many countries. The impact of Tokenization on the economic system, the financial system is something that needs to be studied in detail on how we should have Tokenization. This development will occur when the economic system moves towards becoming a digital economy more and more.”

The digital economy itself has both opportunities, risks and concerns in the highly dynamic and rapidly changing future that affect business adaptation, financial and investment systems, consumer lifestyles and behaviors. The transformation to a digital society and economy has created enormous economic wealth for a number of individuals who can efficiently and effectively take advantage of such conditions, creating platforms and ecosystems that facilitate transactions, lifestyles, business operations, and various investments without being limited by national borders, without being limited by geographical limitations, and being able to offer services or produce products across industries, creating new experiences and creating new business models. What are the policies and management in this matter? It is something that must be done seriously.

Tokenized Economy will require the process of converting various assets, whether they are financial products such as stocks, bonds, debentures, or investment assets such as real estate and various infrastructures, to be owned through digital tokens and can be traded or transferred through the blockchain.

This will greatly reduce the cost of financial and economic transactions. Many transactions will not go through intermediaries, especially the cost of international financial transactions will be reduced the most. It is estimated that Generative AI will play a greater role in the investment system. Investment and financial markets will create a lot of creative works from Generative AI. A significant number of works created by Generative AI could not have been created by human labor, or if human labor were used, it would take a very long time.

Preliminary estimates suggest that Gen AI could add 7% to global GDP (nearly $7 trillion) and 1.5% to productivity over a 10-year period. However, this progress could also have an impact on the job market, with around two-thirds of occupations in the United States facing some degree of automation by AI. While automation may replace some of the workload in some occupations, historical trends suggest that new jobs are often created, offsetting the impact.

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