“Bitcoin Traders Should Monitor Japan Amid Economist’s Debt Collapse Concerns”

Japan’s Debt Crisis Could Drive Crypto and Stablecoin Adoption – 17/9/2025

Japan’s escalating public debt may push investors toward alternative financial assets such as cryptocurrencies and stablecoins. While much of the market’s focus remains on the U.S., senior economist Robin Brooks of the Brookings Institution warns that Japan’s fiscal situation is becoming increasingly precarious. A potential U.S. recession could provide temporary relief, but structural debt challenges remain.

Japan’s Debt Burden
With a debt-to-GDP ratio consistently above 200%, Japan carries the heaviest public debt among advanced economies. Post-pandemic fiscal spending and inflation—now at levels not seen since the 1980s—have raised government borrowing costs. The country’s debt, now around 240% of GDP, puts policymakers in a difficult position.

Brooks explains:
“Keeping interest rates low risks further Yen depreciation and runaway inflation, while allowing yields to rise could threaten debt sustainability. Japan faces a catch-22, and a debt crisis may be closer than most realize.”

Alternative Assets Gain Attention
Investor interest is shifting toward alternatives. Japanese startup JPYC plans to launch the first Yen-pegged stablecoin later this year. While the Yen has strengthened nearly 7% against the U.S. dollar this year, it has lost 41% since 2021, contributing to domestic inflation. Japanese bond yields have reached multi-decade highs, reflecting increased fiscal risk.

Potential Relief from U.S. Recession
A U.S. economic slowdown could lower global yields, offering Japan temporary breathing room. Brooks notes:
“Lower yields may buy time, but long-term solutions require spending cuts or tax increases.”

Whether Japanese citizens will accept these measures remains the critical question for the country’s financial future.