The US Federal Reserve recently announced drastic and controversial measures allowing commercial Banks under its jurisdiction to operate without any reserve with the Federal Reserve.
Usually, commercial banks are required by law to deposit a certain amount of money with the Federal Reserve prior to the issuance of a legal operational licence. The reserve acts as the financial insurance to customers who entrusted their deposits with the bank. But now the Federal Reserve eased the financial regulation to enable more Americans to have access to loans during the Coronavirus lockdowns.
The entire global financial system is changing to adapt to worldwide quarantine. This makes banks and other financial institutions take drastic actions aimed at halting the COVID-19 outbreak. For instance, China and Hungary have tried to quarantine cash as it could become a potential source of contamination.
Coinidol.com, a world blockchain news outlet, has reported that Italian bank Banca Sella launched a bitcoin trading platform, which is now accessible to around 1.2 million users. That indicates an obvious increase of interest in cryptocurrency, as in current conditions it seems safer than cash.
Venezuela decided to completely close all banking institutions attempting to stop the spread of coronavirus. It is considered that banks serve as places where many people are gathered thus making them a potential threat. On the other hand, there is an opinion that this move is nothing more than President Maduro’s attempt to popularize Venezuelan national cryptocurrency Petro.
The problem with the global market lies in the inadequate supply of the USD. The natural thing to do was to print more dollars and supply it to the market but experts say such options could worsen the situation by causing unbearable levels of inflation.
Bitcoin has a fixed supply cap meaning the cryptocurrency could also suffer deflationary tendencies. However, Bitcoin is programmed to continue increasing in value as its supply dwindles, keeping enough BTC on the market at all times, unlike physical cash.
Amidst the current global crisis, Bitcoin presents itself as the best currency to protect the global economy free of inflation.