Cryptocurrency was beyond the reach of any regulatory bodies to have control over or to manage the transaction but cryptocurrency assets no longer live in their own independent world beyond the reach of national regulation. The transactions in the past have already shown how the cryptocurrency market has damaged the economy worldwide. The question today is whether or not digital money can actually become a useful and secure part of the world economy. Here is FinanceShed with a complete package of latest Cryptocurrency News and its effect on the economy.
Cryptocurrency, since its dawn has weekend the economy as in initial stages there was less number of persons transacting in it but the price hike has totally turned the economic stability upside down. The view of digital money was no different from any magic only computer scientists could imagine the digital money that would need no intermediary to be controlled.
Bitcoin was born in 2009 and since then, has resulted in the introduction of various other cryptocurrencies that are now a big part of the global economy. It was not for the first time we heard of a digital currency but the former attempts to create a cryptocurrency failed as a result of double spending which was eradicated in Bitcoin investment and came with a transparent concept of mining and the blockchain.
As per various studies are done and the effects of cryptocurrency were looked into, it was found that the rise in the value of cryptocurrency will raise the issues of financial instability and increase risks faced by banks and financial institutions. Although there is a ban imposed on such currencies by many countries the crypto market is currently a small scale in relation to the scope of the global financial system.
In the BCBS meeting held currently, it was argued that crypto assets are not reliable sources of currency to be accepted as a medium of exchange or store of value. The authority in this meeting also stated that cryptocurrency is a misfit for two of the basic functions of currency that is medium of exchange and store of value and also they do not represent any legal tender as they are not governed by any government or public authority.
The major risk of cryptocurrency is associated with the interaction between banks and crypto-related businesses. The risk also includes the risk of money laundering, fraud, terrorist financing etc. Banking authority needs to be extra cautious regarding these crypto transactions. Also, banks should disclose any doubtful transactions related to cryptocurrency. The banks should be sure about their technical expertise while going for any crypto related transactions or asset management.
The global economy depends on USD and all transactions taking place in the global market are done in USD. After the introduction of Bitcoin, there is a huge challenge for USD and some way or other is outperforming the USD. This is a major change in the global economy that was never seen before.
This can threaten the positions of banks and affect the financial stability which was gained over the years. Also with growth in cryptocurrency transactions the market has been highly unstable and unpredictable. The increase in players in prices has made it totally volatile for the market to gain any stability.