Financial institutions are building their words collectively that there will be a financial crisis in 2023, due to the present circumstances that are prevailing in the international arena. The UK has been experiencing 10.8%inflation and the same scenario is going around the European continent along with the freezing temperature. Also, there is some significant growth in inflation around the world. People claim that this situation is caused mainly by three reasons:-
1) Ukraine - Russian conflicts
2) Zero tolerance policy of China against the covid
3) Protectionism policy adopted by developed countries
Due to the pandemic, people became aware of their demands and focused on the fundamental essentials commodity which adversely impacted the demand side of the market and the above three played a pivotal role in the disruption of the supply chain. When there I loved a scenario of declining demand and supply chain which stages the downfall of GDP. When the GDP of any country goes negative for consecutive two times, we say we are in a financial crisis.
Despite these rumors, the Indian Governor, Shaktikant Das, appeared on the scene and claims that the next financial crisis will happen due to private cryptocurrencies. As it is common to point out that cryptocurrencies put a threat to the regulation of the financial system of a country. Das sharing a seat in the Business Sharing BFSI insight summit asserted that cryptocurrencies put a risk to the "macroeconomic and financial stability" due to no underlined value. In short, he indicates that cryptocurrency doesn't have any support for its value, and this is what put a nation to see threats to the economic indicators.
The value of currencies like dollars, Rupees are backup by the economy of respective nations. And in today's world, the strength of the currency also depends on the strength of dominance in the international arena economically. Take the example of Venezuela's currency could not revive whereas, with the fall of rubble, it was restored when Russia declared its dominance of oil supply to make transactions only in the Rubble. And when we overlook at the latest episode of the FTX, these put scary ingredients to the economic sectors.
When we see, the purpose of crypto, the foremost point is to bypass the flaws of central banks in the payment systems. Generally, for the convenience of the international payment system. This is why the transactions of cryptocurrencies become off the record. Das makes a clear indication that" these cryptocurrencies originated to break the system as they don't believe in the central bank regulations. There, it is to bypass the system and beat the system".
And the final allegation was," cryptocurrencies are 100% a speculative activity". At the start, the price of bitcoin was just below $0.08, and it surged to 60k and it is rolling back, its present value is around $16-17k. This volatility of cryptocurrency values skyrockets with the rumors, as if we see the utility aspects of bitcoins due to high transaction fees it is not fulfilling its purpose, rather it is acting as a trademark to the rich people out there holding coins on their walkers, but for ordinary people, it is out of point to treat cryptocurrencies as payment.
As the Brazilian government passes laws for the acceptance of cryptocurrencies, Das for. Another side of the world insists that cryptocurrency must be prohibited if not then one must be ready for the financial crisis.
When a financial crisis happens, there will be
1) Steep decline in the values of assets
2) Businesses and consumers are unable to pay their debts
3) Financial institutions experience a liquidity shortage.
4) Speculative financial bubble
5) Stock market crash
6) currency crisis and so on.
With the start of the 21st century on the journey of technological advancement, there appeared a new system, blockchain, it has pros and cons attached to it besides it, if it can be utilized properly, we can build a secure system with tight security, as there is increasing threat of insecurity with the time growing day by day.
