Latest news with #governmentpayments
South China Morning Post
13 hours ago
- Business
- South China Morning Post
Word is bonds: China's provinces use special-purpose funds to pay debts
Hunan has become the first province in China to use the proceeds of special-purpose bonds to guarantee government payments to enterprises, with 20 billion yuan (US$2.78 billion) allocated for this year. The inland province made the adjustment to its annual fiscal budget last month, marking the first time the bonds – typically earmarked for revenue-generating construction projects – will be used to cover government arrears. Proceeds will be distributed based on eligible outstanding debts from existing investment projects, according to a statement from the province's department of finance issued last week. The department said the disbursements will be prioritised to help cities and counties across Hunan complete ongoing construction, clear their obligations and reduce fiscal risk. David Wong, a lecturer at Hang Seng University in Hong Kong, called the move 'a step in the right direction,' but warned that the 20-billion-yuan sum could be 'a drop in the bucket' compared with the scale of local government debt 'It remains unclear which arrears will be prioritised or which firms will actually receive payments,' he said. 'The more complex issue is that this is not simply a matter of 'government owing enterprises' but a complex web of entangled triangular debts.' Criss-crossing chains of obligation make the repayment picture opaque for a number of localities, Wong said. 'In many cases, local governments have indirectly incurred debts through state-owned enterprises (SOEs), which in turn owe money to each other. Some SOEs are involved in circular guarantees and cross-debt relationships with both local governments and private companies.'
The Guardian
07-05-2025
- Business
- The Guardian
Why are the Democrats greenlighting Trump's crypto plans?
W hen Elon Musk's 'department of government efficiency' (Doge) gained access to treasury payment systems in February, Democratic party leadership pledged to protect government payments from Donald Trump's influence. Chuck Schumer and Hakeem Jeffries held a press conference announcing the Stop the Steal act that would prevent the takeover of critical government payment infrastructure. On that very same day, high-profile Democrats joined with Republicans to introduce legislation allowing for payments to be made in cryptocurrencies called stablecoins. The bill paves the way for the US president to require that all payments to and from the government are made with cryptocurrencies, which could include the one he has a business interest in. After making millions off a 'memecoin', the crypto-opportunist-in-chief recently entered the burgeoning crypto-payments market by launching a stablecoin. For the uninitiated, stablecoins are crypto products that allege to hold the value of a currency like the US dollar and are intended to be used as digital payments. In fact, stablecoins constantly fail to hold their value, aren't subject to federal consumer protections, and aren't backed by the full faith and credit of the government. If a consumer's stablecoins are hacked, fraudulently or accidentally spent, or lost due to a misplaced password, stablecoin companies will not reverse or reimburse those payments like a credit card company would. If a stablecoin company fails, consumers are not protected by anything like federal deposit insurance. Stablecoins have also become the preferred cryptocurrency for illicit finance. In an awkwardly playful nod to Trump's crypto interests, bipartisan stablecoin bills have been introduced in the House and Senate entitled 'Stable' and 'Genius', respectively, following Trump's 2018 assertion that he is a 'stable genius'. Sponsors of legislation claim their bills protect consumers, guarantee stability and curb their use in illicit finance. Many academics and experts disagree with those assertions. As they point out, the bills give crypto businesses such as the president's access to the same payment system that banks and credit card providers use while subjecting them to far weaker standards than their traditional counterparts. Almost unbelievably, gutting consumer protections and privatizing the dollar may be the least concerning outcomes of stablecoin legislation. On 25 March, Trump issued an executive order mandating adoption of digital payments to and from the US government. That may sound innocuous, but the government already makes 95% of its disbursements electronically. The order doesn't intend to modernize an already-modernized system. Musk exposed the order's true intent when his Doge team took over the payment system, to the aforementioned alarm of congressional Democrats. He endorsed putting those payments 'on the blockchain' – and in so doing, make public payments with private stablecoins. It's not a hypothetical. The administration has already floated issuing $3.3bn in the housing department's community development block grants via stablecoins. USAID has been instructed to make disbursements in stablecoins. And the treasury payments Musk was referring to? That's $5.45tn in government payments from social security to veterans' pay and pensions, federal employee salaries and income tax refunds. Americans might be forced to adopt cryptocurrencies whether they like it or not. The president has demonstrated his willingness to use the power of his office to enrich his family and friends and to provide favors to crypto business partners. Under Trump, SEC lawsuits against his crypto business partners Justin Sun and Binance have been halted. Just last week, Trump's World Liberty Financial announced an opaque $2bn deal with a firm in the United Arab Emirates that is chaired by the UAE's national security adviser, who is the brother of the country's president. It's naive to think Trump would shy away from using his power to shovel profits to the politically influential crypto industry, and his own crypto venture in particular. Crypto's ascendant political influence may explain Democrats' confusing pledge to stop Trump profiting from the presidency with one hand while pushing stablecoin legislation with the other. Conflicts of interest or not, the Democrats' campaign arm continues courting crypto, though it doesn't accept donations in cryptocurrencies. The Democratic Senatorial Campaign Committee chair, Kirsten Gillibrand, is a lead sponsor of the Genius bill. During the Senate banking committee consideration of Genius, news broke that Trump's company was speaking with Binance about the launch of a stablecoin. It was as if the committee had called a recess for a word from its sponsor. Five Democrats still voted in support. House Democrats have sought amendments that would bar government officials from having a financial interest in such assets, but they've gotten little traction. This weekend, nine former Democratic supporters of the bill threatened to block further consideration unless concerns over issues ranging from money laundering to national security were addressed. But they said they remained 'eager to continue working with our colleagues to address these issues'. The Democratic party has rightly pointed out that a sitting president's conflicts of interest undermine the firmament of our democracy. Anyone, especially the president, who would use an office of public trust for personal benefit must be held accountable. Astoundingly, Democrats are poised to bless Trump's crypto grift with the Genius act. If they do, it will be clear that, at least when it comes to crypto, they would rather endorse the president's abuses than fight them. Corey Frayer is the director of investor protection at the Consumer Federation of America and a senior adviser on crypto markets to the former SEC chair Gary Gensler
