Bank of Singapore: Bitcoin and Co. could replace gold as a safe haven | 02/23/21

It has long been clear to crypto fans that cyber currencies are a good alternative to gold. The Bank of Singapore has now also subscribed to this opinion, with some reservations.

• Bank of Singapore sees potential for cryptocurrencies
• Use as a safe haven and for diversification
• Obstacles must be removed

Gold is traditionally a “safe haven” in times of crisis, but for convinced crypto fans, cyber currencies are a good alternative to the yellow precious metal. The international central banks, which are generally very skeptical of crypto currencies, have contributed to this. Because in order to dampen the economic effects of the Corona crisis, the monetary authorities around the globe have theirs Monetary policy loosened enormously, which brings corresponding risks for inflation and national debt with it. For investors whose trust in the state financial system has been shaken as a result, gold, but also decentralized, state-independent and non-inflationary means of payment such as Bitcoin and Co. are becoming more attractive.

In addition to the fear of a loss of value due to inflation, the meager interest rates around the world are also worrying investors. That is why investors are now looking for alternative investment options and, in addition to gold, are also showing increasing interest in crypto assets. The fact that the Bitcoin price recently cracked the $ 50,000 mark is evidence of this growing interest.

Bank of Singapore sees great potential

The Bank of Singapore, a division of Oversea Chinese Banking (OCBC), also believes that cryptocurrencies have the potential to partially replace gold as a store of value. Before that can happen, however, various requirements must first be met, writes “The National”, citing a report by the bank.

“First, investors need trustworthy institutions to keep digital money safe. Second, liquidity must improve significantly so that volatility is reduced to an acceptable level,” said Mansoor Mohi-uddin, the bank’s chief economist.

With this, the chief economist of the Bank of Singapore is addressing essential aspects that crypto-skeptics have long referred to. On the one hand, Bitcoin and Co. are still considered “hacking currency” by many investors. The fact that they are often used for criminal business in the dark web does not contribute to their good reputation, nor does the numerous hacker attacks on Bitcoin platforms.

Therefore, the expert calls for government authorities to curb such criminal activities in order to improve the reputation of cryptocurrencies. This, as well as regulatory acceptance, would give them better legitimacy, which would be in the interests of the global Financial markets in Bitcoin and Co. is likely to increase.

In addition, cryptocurrencies have been very volatile in the past. This did not exactly encourage confidence that this was a safe form of investment. The situation could improve through an increasing commitment of long-term oriented, institutional investors, so that the courses would be moved more by fundamentals than by speculation, said the expert of the Bank of Singapore.

Mohi-uddin is convinced that if these current problems can be solved, then cryptocurrencies could gain a place in the portfolios as a potential “safe haven” and as an opportunity for diversification.

Fiat currencies not at risk

Mansoor Mohi-uddin does not believe that cryptocurrencies will replace state fiat money, because she considers them inefficient for use as a means of payment.

“Governments are extremely wary of any technology that could potentially replace national currencies. Ultimately, this would reduce their ability to print money in times of economic crisis.

Finanzen.at editors

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