Current discussions regarding stablecoins often approach the topic from a singular perspective. To properly analyze the operations and future prospects of stablecoins, a multi-dimensional and multi-perspective examination is necessary. If we aim to promote the development of digital payment systems and achieve healthy growth, we must pay attention to performance and balance across multiple dimensions.

**I. Central Bank Dimension: Preventing Monetary Oversupply and High Leverage Amplification**

Stablecoin issuers hope to bear minimal costs while achieving maximum scale in stablecoin issuance and application. They might wonder: if central banks can print money, why can't we? Today, through stablecoins, they too can have money-printing capabilities. However, due to their lack of deep understanding and sense of responsibility regarding monetary policy, macroeconomic regulation, and public infrastructure functions, they may lack sufficient self-discipline, potentially leading to uncontrolled issuance, high leverage, and instability. Whether stablecoins are stable is not self-proclaimed but requires determination mechanisms.

Currently, central banks have at least two concerns. First is "excessive monetary issuance," where issuers issue stablecoins without genuine 100% reserves, essentially oversupplying. Second is the emergence of high leverage amplification, where post-issuance operations create multiplier amplification effects through monetary derivatives. While the US GENIUS Act and Hong Kong's Stablecoin Ordinance have addressed these concerns, their control mechanisms remain significantly inadequate.

First, the custodial institution for issuance reserves must be clearly defined. In practice, situations exist where custodians fail to fulfill their duties, as evidenced by numerous past cases. In 2019, Facebook initially planned to self-custody Libra's issuance reserve assets, maintaining strong autonomy and retaining custody asset returns. However, reserve custody must be reliable custody - either by central banks or institutions recognized and supervised by central banks; otherwise, it becomes unreliable.

Second, how do we measure and manage amplification effects in stablecoin operations? Even if issuers place 100% reserves, stablecoins will still experience multiplier effects in subsequent operational stages (such as deposits, loans, collateral, trading, and revaluation), requiring potential redemption amounts several times the issuance reserves. While relevant regulations may appear to prevent amplification, deeper observation of monetary issuance and operational patterns reveals that existing rules are far from sufficient to address derivatives and amplification.

We can learn from Hong Kong's example of three commercial institutions issuing Hong Kong dollar banknotes: Hong Kong's three note-issuing banks operate under a mechanism where for every HK$7.8 issued, they must deposit US$1 as reserves with the Hong Kong Monetary Authority while receiving a certificate of indebtedness. Based on Hong Kong dollar cash M0, the economic financial system generates M1 and M2 through derivatives and multiplier effects. During bank runs, targets include not only M0 but also M1 or M2. Even with 100% backing for base money M0, M0 reserves alone cannot handle bank runs and maintain monetary stability.

Stablecoin amplification effects have three known typical channels: first, deposit-lending channels; second, collateral financing channels; third, asset market trading channels (allowing additional purchases or revaluation of issuance reserve assets). Therefore, regulators need to conduct statistics and calculations on the actual circulation volume of issued stablecoins; otherwise, the potential scale of redemption risks cannot be determined. Stablecoin multiplier amplification effects also provide opportunities for fraud and market manipulation.

**II. Financial Service Model Dimension: Real Demand for Decentralization and Tokenization**

Assuming future ecosystems involve large-scale decentralized financial activities and large-scale asset and trading instrument tokenization, stablecoins would have significant utility. First, stablecoins can adapt to decentralized finance (DeFi) development; second, tokenization is a necessary foundation for DeFi operations. What requires deeper investigation is why, or to what extent, we would move toward decentralization and tokenization.

From the supply side, blockchain and distributed ledger technology (DLT) providing decentralized operations indeed have their characteristics. However, from the demand perspective, how much demand exists for decentralization as a new operational system? Will most financial services transition to this new system?

Taking a calm view, not all financial services are suitable for decentralization, and few financial services can achieve significant efficiency improvements through decentralized methods. The real demand for tokenization as a technological foundation also requires calm assessment.

Regarding the anticipated upgrade and transformation of payment systems (particularly cross-border payments), China and several Asian countries have achieved successful progress in retail payment system development based on mobile phones, using QR codes and near-field communication (NFC) as merchant interfaces, still based on accounts. Currently, China's developed digital currency is also account-based, representing an extension and iterative update of the existing financial system. Additionally, some Asian countries' fast payment systems with cross-border direct connections have not chosen decentralized, tokenized routes.

To date, centralized account systems continue to demonstrate good applicability. The foundation for replacing account-based payment systems with comprehensive tokenization is insufficient.

The Bank for International Settlements (BIS) has proposed a centralized ledger architecture - the Unified Ledger - which would tokenize bank deposits and numerous other financial services. Within a centralized framework, central bank digital currencies (CBDCs) can play important roles, combining centralization and tokenization. What requires questioning is that not all types of financial assets are suitable for tokenization, nor are all financial service segments suitable for decentralization; specific analysis and comparison are needed for each item.

**III. Payment System Perspective: Technical Paths and Compliance Challenges**

Payment system upgrades have two major concerns: payment efficiency and compliance.

Payment efficiency improvement is considered one of the potential advantages of stablecoins. In the current payment system digitization process, there are roughly two paths for efficiency improvement. The first path continues to be account-based, optimizing and innovating based on IT and internet technology. The second path is an entirely new payment system based on blockchain technology and cryptocurrencies.

From the current development of payment systems in China and Southeast Asia, the main progress achieved so far remains built on internet and IT technology foundations, including third-party payment platform development, central bank digital currency (CBDC) progress, NFC-dependent hard wallets, and fast payment system interconnections. These developments have significantly improved payment efficiency and convenience.

Technology routes themselves are not the sole criterion; payment performance comparisons must highly emphasize security and compliance, including Know Your Customer (KYC), identity verification, account management, anti-money laundering (AML), counter-terrorism financing (CFT), anti-gambling, and anti-drug trading compliance requirements. Some believe that since stablecoins are blockchain-based, they don't involve account opening. This is inaccurate. Even using "soft wallets" requires user identity verification and account opening processes to meet compliance requirements. Currently, stablecoin payment businesses have obvious deficiencies in KYC and compliance.

**IV. Market Trading Dimension: Market Manipulation and Investor Protection**

From financial market and asset market trading perspectives, the most important issue to prevent is market manipulation, particularly price manipulation, requiring sufficient transparency and effective regulation. In fact, such manipulation phenomena already exist, with several related cases having occurred. Some price manipulation behaviors have obvious fraudulent characteristics. However, under improved current institutional frameworks, whether the US GENIUS Act, Hong Kong's related ordinances, or Singapore's regulatory provisions, none adequately address these issues reassuringly.

A new phenomenon is mixed coins or multi-currency hybrid usage, where multiple currencies are simultaneously used for trading or payments within one system. Not all components in these combinations are genuine stablecoins, nor do they necessarily have consistent, recognized stablecoin standards. In current asset markets, particularly virtual asset exchanges, many trading targets can accept stablecoins, other non-stable cryptocurrencies, or even completely unstable currencies as payment. This arrangement provides possibilities for market manipulation, becoming one of the key regulatory concerns.

Notably, some market promoters mention that through stablecoins and RWA technologies, asset trading shares can be divided into very small portions, enabling broader investor participation, claiming this model has attracted numerous students under 18 to participate in trading.

While some believe this helps cultivate youth participation in capital markets and benefits future capital market prosperity, from an investor protection perspective, whether this practice is truly beneficial remains to be observed. People have long emphasized investor suitability and qualification requirements; whether minors are suitable for asset market trading currently lacks sufficient basis. If market manipulation cannot be effectively prevented while attracting unqualified investors, risks will significantly expand.

**V. Micro-Behavioral Dimension: Motivations of Participants**

Stablecoin issuing institutions are generally profit-oriented commercial entities, and numerous participants in stablecoin-related payment businesses and asset trading businesses are also commercial entities with commercial motivations. However, stablecoins and payment systems contain some functions or segments with infrastructure and inclusive attributes that cannot be guided by corporate profit maximization logic but should possess public service spirit. Clear definitions should exist regarding which areas are suitable for market entities and which belong to infrastructure nature.

Micro-perspective analysis of micro-level motivations and behavioral patterns of stablecoin participants is needed. What considerations drive people to use stablecoins for payments? Why are payees willing to accept stablecoins? What motivates stablecoin issuing institutions? What trading situations do private exchanges pursue? Currently, Hong Kong has issued licenses to 11 virtual asset trading platforms; what trading entities and varieties do these licensed institutions focus on? How do they profit?

Although many believe stablecoins will reshape payment systems, objectively speaking, current payment systems, especially in retail payments, have little room for cost reduction. In China, existing retail payment systems, including third-party payment platforms, central bank digital currencies (CBDCs), soft and hard wallets, and clearing infrastructure, have not adopted decentralized and tokenized routes. After years of development, they have become highly efficient and low-cost, leaving very limited space for new entrants to reduce costs and profit in this field.

Looking at the United States, there may still be some room for cost reduction and profit in the US retail payment system because the US has long relied on credit card payment systems, where merchants typically bear 2% price discounts, creating incentives to try new, lower-cost payment systems. This also indicates that from payer and payee perspectives, situations differ across countries and regions.

Cross-border payments and remittances are frequently mentioned focus areas when discussing stablecoin application scenarios. To explore this issue deeply, we first need to break down the reasons for currently high cross-border payment costs, specifically identifying which segments cause high fees.

It's worth noting that some claims about traditional cross-border payment systems being "extremely expensive" technically may be exaggerated. Actually, many cost factors are not technical but involve foreign exchange controls, behind which lie numerous institutional issues including balance of payments, exchange rates, and monetary sovereignty. Another portion of costs comes from KYC and AML compliance costs, which are difficult to avoid even with stablecoins. Additionally, some costs come from "rents" from cross-border foreign exchange business as licensed operations. In summary, stablecoin intervention in cross-border payments is not as attractive as imagined. Of course, scenarios where domestic currencies have failed and require dollarization should be considered separately.

From stablecoin issuers' perspectives, if they realize insufficient attraction in domestic and cross-border payments, the most likely focus application would be asset market trading, particularly virtual asset trading. Some assets in these markets have strong speculative attributes, easily subject to speculation driving up prices, creating attraction for stablecoin issuance, especially since some virtual assets can serve as qualified or semi-qualified stablecoin issuance reserves.

From current micro-behavioral perspectives, we must guard against risks of stablecoins being excessively used for asset speculation; directional deviation could trigger fraud and financial system instability.

Additionally, stablecoin-related industries using stablecoin popularity to increase their company valuations is another noteworthy behavioral pattern. Some companies can use this to "raise money" through capital markets or achieve capital appreciation for cashing out, while stablecoin business itself, its profitability, and sustainability are not their primary concerns. This is detrimental to healthy financial system development and may accumulate systemic risks.

**VI. Circulation Path Dimension: Circulation Mechanism from Issuance to Redemption**

Stablecoin circulation paths involve the entire cycle from issuance to specific scenario market circulation and withdrawal.

Using People's Bank of China banknote issuance as an example, printed banknotes are first stored in specific issuance vaults. Whether these banknotes can and when they enter markets depends on commercial banks' cash needs. Commercial banks only withdraw cash from People's Bank issuance vaults when their customers have net demands or show lending deficits. Withdrawals create occupancy costs for commercial banks, so they return excess inventory. This shows that money entering circulation is not automatic.

Similarly, stablecoin issuers obtaining relevant licenses and paying reserves does not equal issuing stablecoins. Without sufficient demand scenarios, stablecoins may not enter effective circulation, meaning licenses might be obtained without successful issuance. Theoretically, circulation paths should be network-like, often with several high-traffic main lines. If the payment main line is not smooth, stablecoin circulation's main channel would excessively rely on virtual asset speculation, creating health concerns.

Additionally, whether stablecoins are used as temporary payment media during transactions or as value storage tools for certain periods affects stablecoin market retention after issuance. If used only for transactions while minimizing holdings, stablecoins play weaker roles with lower issuance volumes, involving circulation paths, holding motivations, behaviors, and support systems. This cannot be automatically granted by issuance licenses.

In conclusion, facing stablecoins as a new phenomenon, scholars, researchers, and practitioners need multi-dimensional observation and analysis of their functions and implementation paths, avoiding imprecise concepts, data, and unidirectional thinking. Through comprehensive judgment across important dimensions, we can better control market directions.