Cryptocurrency’s Growing Role in Modern Global Currency Markets
By: Samantha Joule Fow
The annual meeting of the International Monetary Fund (“IMF”) and World Bank was held this year took place in Bali Nusa Dua, Indonesia. The event brought together central bankers, ministers of finance and development, and many other professionals in the world of finance and business to discuss and build policy on matters of global concern. However, this year’s meeting was eclipsed by a recent wave of financial market upheaval, and the growing threat it’s mounting against global economic growth.
From the trade conflict between the U.S. and China to the near complete collapse of the in the formerly-luxe Venezuelan economy, things aren’t looking too great for global currency markets at the moment. There’s no telling what the ongoing political and economic chaos will bring, and by no means have the cryptocurrency markets themselves been immune. However, financial experts at the recent IMF meeting are murmuring about possible unforeseen impacts – both positive and negative – that cryptocurrency may have on today’s global currency markets.
Non-Fiat Currency Hedges Against Fluctuations in World Currency Values
The International Monetary Fund released a statement during the annual meeting directed at national leaders, urging countries to try and keep their debt under control. The IMF encouraged the implementation of policies that ensure borrowing is performed with due consideration of inflation and sustained economic growth. However, even with worldwide over-borrowing and the ongoing chaos in world trade, the IMF still predicts that economic growth with continue to flourish. And as usual, innovation will be key to driving growth across the world economy even within the cumbersome global currency markets.
With international disagreements threatening the financial market, it may be time to look at a global currency standard that is less impacted from the unwise decisions of national political leaders and less likely to be affected in times of market turmoil. In this regard, stable cryptocurrencies can offer a valuable non-fiat global standard for currencies in global trade.
Finding Stability in Digital Coin Markets
To understand the value of cryptocurrency in times of market downturn, it is important to revisit what attracted the world to the notion of a decentralized digital currency in the first place. Cryptocurrency has the potential to be a stable form of a global currency unregulated by the constraints of political decisions. This affords people around the world easy access to the financial services they need, requiring nothing more than access to internet. And while the developing cryptocurrency market is still getting its legs beneath it, digital coins offer enough of a value to survive market dips and turns fueled by speculation and risk.
Several policymakers scoff at the idea of cryptocurrency markets stabilizing to the point where they can become a major part of the world trade economy. They argue that it’s impossible for digital coin markets to find stability without external controls. However, others are encouraged by the cryptocoin market’s growing ability to self-regulate.
Autonomous Currencies Offer Inherent Value
The global recession of 2008 taught us all exactly what sort of damage can be done when financial markets fail to serve the purposes for which they were intended. Just as the last decade was marked by a worldwide economic pullback triggered by inappropriate behavior in financial services markets, the next may very well see a similar response to irresponsible trade policies being enacted by today’s world leaders.
Improper trade policy decisions don’t just impact currency values and inflation rates, they hurt domestic jobs and businesses. Until we are better able to trust world leaders, cryptocurrency’s inherent autonomy may be its biggest strength rather than its most often-cited weakness.