Banking and Cryptocurrencies: Developments from Around the World During Coronavirus
May 22, 2020 23:41
Recession, Depression, Crisis…
Words like these are becoming the new norm every time you open the newspaper or the television. While the world was dreading Coronavirus from a health perspective, the economic impact of the same is likely to kill and affect more people.
While critics of the traditional financial order and economic systems will point out how we were already sitting on a fragile foundation, others are divided on the way forward.
In this article, we will look at how different nations around the world are dealing with the economic crisis. We will also look at why it is important for the global community to start reimagining the future of global finance with cryptocurrencies.
Economic Problems faced by Major Economies
At a time when most nations of the world are struggling with their financial positions, there is still no hope for the pandemic to end. Very recently, Germany became the first major economy to announce that it had gone into Recession.
Over hundred banks in Germany have started collecting negative interest rates on deposits from consumers. The German Finance Ministry has also stated that the first quarter of 2020 was similar to the financial crashes of 2007-2008.
However, it also sounded an alarm that the second quarter is going to be much worse, when the full impact of the Coronavirus is going to be felt on the economy. The financial experts feel that this is going to be similar to the times of the unification of Germany.
According to the IMF and the World Bank, almost all major economies are going to experience severe contractions and negative growth. This includes nearly all European countries and the United States of America. Global bodies state that it is only India and China, which are going to experience marginal growth rates in GDP in the coming two years.
Is this the perfect time to rethink the future of Global Finance?
Sceptics and critics of the Keynesian and Smithian economic systems point out that these financial systems have lived out their lives. They criticise the fragile nature of economics and state that policy makers continue to manipulate financial decision making in connivance with central banks in different parts of the world.
Many point out that financial assets like cryptocurrencies should be seriously considered as a workable alternative to traditional fiat currencies. If you have been following the chatter online, you might have noticed a rather strange development.
At a time when stock markets are crashing, money is losing its value and all hell is breaking loose generally, one asset is steadily rising in value. Bitcoin, the cryptocurrency has recovered from a low of $3500 in March and is rallying hard towards the $10K mark in May.
It also shows how traditional investors are moving away from shares and stocks of a traditional nature. It also proves how many in the financial community have lost faith in government’s way of handling economic crisis- printing more monies and stimulus packages!
Is the future of Global Finance going to be Crypto?
While it is too early to take a call on whether crypto like Bitcoin can go truly mainstream, a revolution has definitely been ignited because of the incompetence of the authorities. If not crypto, then major countries are looking at CBDCs as a competent and workable solution of taking finance into the digital age in the next decade.
While China has shown the way with the Digital Yuan, other countries are also pursuing suit. With crypto investments witnessing steady interest and growth, we might be moving towards a new financial order once the Coronavirus pandemic ends.
If you wish to know more about investing, trading and profiting from cryptocurrencies like Bitcoin, please click here.
Do you think the world is ready for a post Coronavirus new financial system? Let us know your answers in the comments section below.
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